Kose, M. Ayhan

Prospects Group, The World Bank
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International macroeconomics, International finance
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Prospects Group, The World Bank
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Last updated January 31, 2023
M. Ayhan Kose is Director of the World Bank Group’s Prospects Group. He previously worked in the Research and Western Hemisphere Departments of the International Monetary Fund. He is a Nonresident Senior Fellow at the Brookings Institution, a Research Fellow at the Center for Economic Policy Research, a Dean’s Fellow at University of Virginia’s Darden School of Business, and a Research Associate at the Center for Applied Macroeconomic Analysis.
Citations 4 Scopus

Publication Search Results

Now showing 1 - 8 of 8
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    The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses
    (World Bank, Washington, DC, 2015-03) Baffes, John ; Kose, M. Ayhan ; Ohnsorge, Franziska ; Stocker, Marc
    This note combines and distills existing and new research to inform discussion on the topical policy issue of oil prices. Following four years of relative stability at around $105 per barrel (bbl), oil prices have declined sharply since June 2014 and are expected to remain low for a considerable period of time. The drop in prices likely marks the end of the commodity supercycle that began in the early 2000s. Since the past episodes of such sharp declines coincided with substantial fluctuations in activity and inflation, the causes and consequences of and policy responses to the recent plunge in oil prices have led to intensive debates. This paper addresses four questions at the center of these debates, with particular emphasis on emerging market and developing economies: 1) How does the recent decline in oil prices compare with previous episodes? 2) What are the causes of the sharp drop and what is the outlook for oil price? 3) What are the economic and financial consequences? 4) What are the main policy implications? The decline in oil prices will lead to significant real income shifts from oil exporters to oil importers, likely resulting in a net positive effect for global activity over the medium term. However, several factors could counteract the global growth and inflation implications of the lower oil prices. These include weak global demand and limited scope for additional monetary policy easing in many countries. The disinflationary implications of falling oil prices may be muted by sharp adjustments in currencies and effects of taxes, subsidies, and regulations on prices. Regarding fiscal policy, the loss in oil revenues for exporters will strain public finances, while savings among oil importers could help rebuild fiscal space. Lower oil prices also present a window of opportunity to implement structural reforms. These include, in particular, comprehensive and lasting reforms of fuel subsidies, as well as energy taxes more broadly.
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    Inflation in Emerging and Developing Economies: Evolution, Drivers and Policies
    (Washington, DC: World Bank, 2019) Ha, Jongrim ; Kose, M. Ayhan ; Ohnsorge, Franziska ; Ha, Jongrim ; Kose, M. Ayhan ; Ohnsorge, Franziska ; Ivanova, Anna ; Laborde, David ; Lakatos, Csilla ; Martin, Will ; Matsuoka, Hideaki ; Montiel, Peter J. ; Panizza, Ugo ; Pedroni, Peter ; Stocker, Marc ; Unsal, Filiz D. ; Vorisek, Dana ; Yilmazkuday, Hakan
    Emerging market and developing economies, like advanced economies, have experienced a remarkable decline in inflation over the past half-century. Yet, research into this development has focused almost exclusively on advanced economies. This book fills that gap, providing the first comprehensive and systematic analysis of inflation in emerging market and developing economies. It examines how inflation has evolved and become synchronized among economies; what drives inflation globally and domestically; where inflation expectations have become better-anchored; and how exchange rate fluctuations can pass through to inflation. To reach its conclusions, the book employs cutting edge empirical approaches. It also offers a rich data set of multiple measures of inflation for a virtually global sample of countries over a half-century to spur further research into this important topic.
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    Global Inflation Synchronization
    (World Bank, Washington, DC, 2019-03) Ha, Jongrim ; Kose, M. Ayhan ; Ohnsorge, Franziska L.
    The paper studies the extent of global inflation synchronization using a dynamic factor model in a large set of countries over a half century. The authors' methodology allows them to account for differences across groups of countries (advanced economies and emerging market and developing economies) and to analyze commonalities in inflation synchronization across a wide range of inflation measures. The paper reports three major results. First, inflation movements have become increasingly synchronized internationally over time: a common global factor has accounted for about 22 percent of variation in national inflation rates since 2001. Second, inflation synchronization has also become more broad-based: while it was previously much more pronounced among advanced economies than among emerging market and developing economies, it has become substantial in both groups over the past two decades. In addition, inflation synchronization has become significant across all inflation measures since 2001, whereas it was previously prominent only for inflation measures that included mostly tradable goods.
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    The Aftermath of Debt Surges
    (World Bank, Washington, DC, 2021-09) Kose, M. Ayhan ; Ohnsorge, Franziska ; Reinhart, Carmen ; Rogoff, Kenneth
    Debt in emerging market and developing economies (EMDEs) is at its highest level in half a century. In about nine out of 10 EMDEs, debt is higher now than it was in 2010 and, in half of the EMDEs, debt is more than 30 percentage points of gross domestic product higher. Historically, elevated debt levels increased the incidence of debt distress, particularly in EMDEs and particularly when financial market conditions turned less benign. This paper reviews an encompassing menu of options that have, in the past, helped lower debt burdens. Specifically, it examines orthodox options (enhancing growth, fiscal consolidation, privatization, and wealth taxation) and heterodox options (inflation, financial repression, debt default and restructuring). The mix of feasible options depends on country characteristics and the type of debt. However, none of these options comes without political, economic, and social costs. Some options may ultimately be ineffective unless vigorously implemented. Policy reversals in difficult times have been common. The challenges associated with debt reduction raise questions of global governance, including to what extent advanced economies can cast their net wider to cushion prospective shocks to EMDEs.
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    One-Stop Source: A Global Database of Inflation
    (World Bank, Washington, DC, 2021-07) Ha, Jongrim ; Kose, M. Ayhan ; Ohnsorge, Franziska
    This paper introduces a global database that contains inflation series: (i) for a wide range of inflation measures (headline, food, energy, and core consumer price inflation; producer price inflation; and gross domestic product deflator changes); (ii) at multiple frequencies (monthly, quarterly and annual) for an extended period (1970–2021); and (iii) for a large number (up to 196) of countries. As it doubles the number of observations over the next-largest publicly available sources, the database constitutes a comprehensive, single source for inflation series. The paper illustrates the potential use of the database with three applications. First, it studies the evolution of inflation since 1970 and document the broad-based disinflation around the world over the past half-century, with global consumer price inflation down from a peak of roughly 17 percent in 1974 to 2.5 percent in 2020. Second, it examines the behavior of inflation during global recessions. Global inflation fell sharply (on average by 0.9 percentage points) in the year to the trough of global recessions and continued to decline even as recoveries got underway. In 2020, inflation declined less, and more briefly, than in any of the previous four global recessions over the past 50 years. Third, the paper analyzes the role of common factors in explaining movements in different measures of inflation. While, across all inflation measures, inflation synchronization has risen since the early 2000s, it has been much higher for inflation measures that involve a larger share of tradable goods.
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    Inflation Expectations: Review and Evidence
    (World Bank, Washington, DC, 2019-03) Kose, M. Ayhan ; Matsuoka, Hideaki ; Panizza, Ugo ; Vorisek, Dana
    This paper presents a comprehensive examination of the determination and evolution of inflation expectations, with a focus on emerging market and developing economies (EMDEs). The results suggest that long-term inflation expectations in EMDEs are not as well anchored as those in advanced economies, despite notable improvements over the past two decades. Indeed, in EMDEs, long-term inflation expectations are more sensitive to both domestic and global inflation shocks. However, EMDEs tend to be more successful in anchoring inflation expectations in the presence of an inflation targeting regime, high central bank transparency, strong trade integration, and a low level of public debt.
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    Understanding Inflation in Emerging and Developing Economies
    (World Bank, Washington, DC, 2019-02) Ha, Jongrim ; Kose, M. Ayhan ; Ohnsorge, Franziska L.
    Emerging market and developing economies (EMDEs) have experienced an extraordinary decline in inflation since the early 1970s. After peaking in 1974 at 17.3 percent, inflation in these economies declined to 3.5 percent in 2017. Despite a checkered history of managing inflation among many EMDEs, disinflation occurred across all regions. This paper presents a summary of a recent book, "Inflation in Emerging and Developing Economies: Evolution, Drivers, and Policies," that analyzes this remarkable achievement. The findings suggest that many EMDEs enjoy the benefits of stability-oriented and resilient monetary policy frameworks, including central bank transparency and independence. Such policy frameworks need to be complemented by strong macroeconomic and institutional arrangements. Inflation expectations are more weakly anchored in EMDEs than in advanced economies. In EMDEs that do not operate inflation targeting frameworks, exchange rate movements tend to have larger and more persistent effects on inflation.
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    Understanding the Global Drivers of Inflation: How Important Are Oil Prices?
    (World Bank, Washington, DC, 2023-01) Ha, Jongrim ; Kose, M. Ayhan ; Ohnsorge, Franziska ; Yilmazkuday, Hakan
    This paper examines the global drivers of inflation in 55 countries over 1970–2022. The paper estimates a Factor-Augmented Vector Autoregression model for each country and assess the importance of several global (demand, supply, and oil price) and domestic shocks. It reports three main results. First, global shocks have explained about 26 percent of inflation variation in a typical economy. Oil price shocks accounted for only about 4 percent of inflation variation, but they had a statistically significant impact on inflation in three-quarters of the countries. Second, global shocks have become more important in driving inflation variation over time. The share of inflation variance caused by oil price shocks increased from 4 percent prior to 2000 to roughly 9 percent during 2001–22. They also accounted for some of the steep runup in inflation between mid-2021 and mid-2022. Third, oil price shocks tended to contribute significantly more to inflation variation in advanced economies, countries with stronger global trade and financial linkages, commodity importers, net energy importers, countries without inflation-targeting regimes, and countries with pegged exchange rate regimes. The headline results are robust to a wide range of exercises—including alternative measures of global factors and oil prices—and aggregation of countries.