Key Elements of Global Inflation

University of Nottingham, GEP Research Paper 2009/22

34 Pages Posted: 11 Nov 2009

See all articles by Robert Anderton

Robert Anderton

European Central Bank (ECB)

Alessandro Galesi

idealista

Marco J. Lombardi

Bank for International Settlements (BIS) - Monetary and Economic Department

Filippo di Mauro

European Central Bank (ECB)

Date Written: November 9, 2009

Abstract

Against the background of large fluctuations in world commodity prices and global growth, combined with ongoing structural changes relating to globalization, this paper examines some of the key factors affecting global inflation. The paper empirically investigates various relative price and structural impacts on global inflation by: estimating a GVAR to examine how oil price shocks feed through to core and headline inflation; calculating the impact of increased imports from low-cost countries on manufacturing import prices; estimating Phillips curves in order to shed light on whether the inflationary process in the OECD countries has changed over time, particularly with respect to the roles of import prices, unit labour costs and the output gap. Overall, the paper finds that there seem to be various significant pressures on global trade prices and labour markets associated with structural factors possibly partly due to globalisation which, in addition to monetary policy, seem to be behind some of the changes in the inflation process over the period examined in this paper.

Keywords: Phillips Curve, inflation, output gap, import prices, unit labour costs, globalisation, monetary policy.

JEL Classification: E31, O52, F16

Suggested Citation

Anderton, Robert and Galesi, Alessandro and Lombardi, Marco Jacopo and di Mauro, Filippo, Key Elements of Global Inflation (November 9, 2009). University of Nottingham, GEP Research Paper 2009/22, Available at SSRN: https://ssrn.com/abstract=1502730 or http://dx.doi.org/10.2139/ssrn.1502730

Robert Anderton (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
0049 69 13440 (Phone)
0044 69 1344 6000 (Fax)

Alessandro Galesi

idealista ( email )

Madrid, Madrid 28014
Spain

Marco Jacopo Lombardi

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland
+41612809492 (Phone)

Filippo Di Mauro

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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