Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/328088 
Year of Publication: 
2020
Citation: 
[Journal:] Review of Economic Analysis (REA) [ISSN:] 1973-3909 [Volume:] 12 [Issue:] 2 [Year:] 2020 [Pages:] 203-233
Publisher: 
International Centre for Economic Analysis (ICEA), Waterloo (Ontario)
Abstract: 
There is no consensus over the importance of 'global forces' on inflation. This study explores the role of structural breaks in the inflation process, and their timing, whether it is common across countries, and the extent to which 'global forces' are relevant. Three conclusions stand out. Global inflation impacts inflation in both AE and EME, but the impact is more heterogeneous than existing narratives have argued. One's interpretation of global influences on domestic inflation differs, according to whether poorly performing economies in inflation terms are considered as opposed to the standard practice of examining mean inflation performance. A focus on observed inflation alone ignores that inflation expectations, including a global version of this variable, also plays a critical in inflation dynamics. Finally, there are significant spillovers in inflation between AE and EME, but these too are sensitive according to relative inflation performance. Some policy implications are also drawn.
Subjects: 
Inflation
Globalization
monetary policy
Vector autoregressions
local projections
quantile regressions
JEL: 
E31
E52
E58
C31
C32
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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