Publication:
What Explains Global Inflation

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dc.contributor.authorHa, Jongrim
dc.contributor.authorKose, M. Ayhan
dc.contributor.authorOhnsorge, Franziska
dc.contributor.authorYilmazkuday, Hakan
dc.date.accessioned2023-12-21T16:48:05Z
dc.date.available2023-12-21T16:48:05Z
dc.date.issued2023-12-21
dc.description.abstractThis paper examines the drivers of fluctuations in global inflation, defined as a common factor across monthly headline consumer price index (CPI) inflation in G7 countries, over the past half-century. It estimates a Factor-Augmented Vector Autoregression model where a wide range of shocks, including global demand, supply, oil price, and interest rate shocks, are identified through narrative sign restrictions motivated by the predictions of a simple dynamic general equilibrium model. The authors report three main results. First, oil price shocks followed by global demand shocks explained the lion’s share of variation in global inflation. Second, the contribution of global demand and oil price shocks increased over time, from 56 percent during 1970–1985 to 65 percent during 2001–2022, whereas the importance of global supply shocks declined. Since the pandemic, global demand and oil price shocks have accounted for most of the variation in global inflation. Finally, oil price shocks played a much smaller role in global core CPI inflation variation, for which global supply shocks were the main source of variation. These results are robust to various sensitivity exercises, including alternative definitions of global variables, different samples of countries, and additional narrative restrictions.en
dc.identifierhttp://documents.worldbank.org/curated/en/099417212182324899/IDU04d2b00a8052e30403409fc1033a96b1c81ac
dc.identifier.doi10.1596/1813-9450-10648
dc.identifier.urihttps://openknowledge.worldbank.org/handle/10986/40793
dc.languageEnglish
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Papers; 10648
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectOIL PRICE
dc.subjectDEMAND SHOCK
dc.subjectSUPPLY SHOCK
dc.subjectINTEREST RATE SHOCK
dc.subjectINFLATION DRIVERS
dc.subjectGLOBAL INFLATION
dc.titleWhat Explains Global Inflationen
dc.typeWorking Paper
dspace.entity.typePublication
okr.crossref.titleWhat Explains Global Inflation
okr.date.disclosure2023-12-18
okr.date.lastmodified2023-12-18T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099417212182324899/IDU04d2b00a8052e30403409fc1033a96b1c81ac
okr.guid099417212182324899
okr.identifier.docmidIDU-4d2b00a8-52e3-4034-9fc1-33a96b1c81ac
okr.identifier.doi10.1596/1813-9450-10648
okr.identifier.doihttp://dx.doi.org/10.1596/1813-9450-10648
okr.identifier.externaldocumentum34218168
okr.identifier.internaldocumentum34218168
okr.identifier.reportWPS10648
okr.import.id2657
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099417212182324899/pdf/IDU04d2b00a8052e30403409fc1033a96b1c81ac.pdfen
okr.topicMacroeconomics and Economic Growth::Inflation
okr.topicMacroeconomics and Economic Growth::Investment and Investment Climate
okr.topicEnergy::Energy Demand
okr.topicFinance and Financial Sector Development::Access to Finance
okr.unitProspects Group (DECPG)
relation.isAuthorOfPublicationac9fefe8-9d4d-555d-bb68-f056fd7a3790
relation.isAuthorOfPublication.latestForDiscoveryac9fefe8-9d4d-555d-bb68-f056fd7a3790
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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