The Globalisation of Inflation: A View from the Cross Section

Abstract

We examine whether a higher degree of trade integration is associated with a higher rate of price spillovers. More specifically, we examine how bilateral sector-specific trade integration affects the bilateral co-movements of sectoral prices. Our findings suggest that increasing trade integration was associated with a significant increase in the rate of price spillovers, which is consistent with the hypothesis that increasing real integration has made the inflation process a more global one. We conclude with describing our current work in this research field.

Full publication: Globalisation and Inflation Dynamics in Asia and the Pacific

Keywords: Globalisation, Inflation, International Supply Chain, Exchange Rate Pass

JEL Classification: E31, F41, F61, F62