​​​Second-round Effects and Asymmetry: Impact of Oil Price Shocks on Emerging Market Inflation​

Joan Christine Allon-Pineda and Christian Kenneth Collado
Additional contact information
Joan Christine Allon-Pineda: Bangko Sentral ng Pilipinas
Christian Kenneth Collado: Bangko Sentral ng Pilipinas

No 202605, BSP Discussion Paper Series from Bangko Sentral ng Pilipinas

Abstract: Successive supply shocks drove inflation to historically high levels in many emerging economies between 2021 to 2023. Central banks need to assess both the direct and indirect pass-through of supply shocks to domestic prices in crafting an effective policy response to manage inflation. We estimate these effects for global oil price shocks using the local projections methodology and examine the asymmetries in the pass-through across various heterogeneous characteristics for selected emerging economies. Our results show significant and persistent direct and second round effects to a global oil price shock, with generally greater response from emerging economies. The heterogeneity results suggest that oil price pass-through tends to be lower in economies characterized by greater central bank independence, more flexible exchange rate arrangements, and established fiscal rules. Both the direction and persistence of oil shocks matter, as households and firms may find frequent adjustments costly. Finally, high inflation with de-anchored expectations, along with depreciating and volatile exchange rates, further magnifies the inflationary impact of oil price shocks.

JEL-codes: C32 C36 E31 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2026-05
References: Add references at CitEc
Citations:

Published as BSP Discussion paper No. 2026-05, June 2026

Downloads: (external link)
https://www.bsp.gov.ph/Sites/researchsite/Publicat ... -Papers/DP202604.pdf

Related works:
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:bhd:dpaper:202605

Access Statistics for this paper

More papers in BSP Discussion Paper Series from Bangko Sentral ng Pilipinas Contact information at EDIRC.
Bibliographic data for series maintained by MB Pagalunan ().