The Transmission of Supply Shocks to Inflation: The Case of Argentina 2004-2022

Lucas Ordoñez ()
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Lucas Ordoñez: Interdisciplinary Institute of Political Economy (UBA-CONICET), Argentina; University of Buenos Aires (UBA), Argentina

Ensayos Económicos, 2025, vol. 1, issue 85, 51-91

Abstract: This article investigates how domestic and external supply shocks influence inflation in Argentina using the Local Projections methodology. I categorise supply shocks into two groups: domestic and external. Domestic supply shocks include the nominal exchange rate and regulated prices. In contrast, external supply shocks include international energy and food prices. The results reveal two main findings. First, both domestic and external supply shocks positively influence inflation. Second, there are significant variations in the magnitude and dynamic of how these supply shocks are transmitted to inflation. These findings provide new evidence on how supply shocks influence inflationary dynamics in developing countries and small open economies.

Keywords: cost-push shocks; exchange rate pass-through; impulse responses; inflation; Local Projections; supply shocks (search for similar items in EconPapers)
JEL-codes: C22 E31 F41 (search for similar items in EconPapers)
Date: 2025
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