Is Inflation Domestic or Global? Evidence from Emerging Markets

Rudolfs Bems, Francesca Caselli, Francesco Grigoli (), Bertrand Gruss and Weicheng Lian

No 2018/241, IMF Working Papers from International Monetary Fund

Abstract: Following a period of disinflation during the 1990s and early 2000s, inflation in emerging markets has remained remarkably low and stable. Was this related to a global disinflation environment triggered by China's integration into world trade and the broader globalization in these economies, or to better domestic policies? In this paper, we review the inflation performance in a sample of 19 large emerging markets in the past couple of decades and quantify the impact of domestic and global factors in determining inflation. We document that the level, volatility, and persistence of inflation declined significantly, albeit not uniformly. Our results suggest that longer-term inflation expectations, linked to domestic factors, were the main determinant of inflation. External factors played a considerably smaller role. The results are a useful piece of evidence as emerging markets craft their monetary policies to navigate the future shift in global financial conditions.

Keywords: WP; inflation expectation; inflation dynamics; Emerging markets; globalization; inflation; inflation expectations; Phillips Curve; price inflation; headline inflation dynamics; price pressure; Emerging and frontier financial markets; Inflation targeting; Output gap; Food prices; Global (search for similar items in EconPapers)
Pages: 26
Date: 2018-11-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=46306 (application/pdf)

Related works:
Journal Article: Is Inflation Domestic or Global? Evidence from Emerging Markets (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2018/241

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().