Unpacking Global Inflation

Yun Young Gwak, James Morley and Benjamin Wong

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: We unpack global inflationary forces by distinguishing imported cost-push pressures from other inflation drivers and examine implications for domestic policy autonomy. Our empirical strategy thus fits a dynamic factor model to constructed goods and services inflation data from 42 countries, with identification exploiting their relative tradability. We find that global inflation comovement is not entirely imported. Imported shocks dominate only at short horizons, especially for goods, whereas a persistent common component remains across both sectors. Although inflation has shifted toward imported pressures, the residual global component suggests that synchronization may still partly reflect policy-relevant domestic margins.

Keywords: global inflation; synchronization; sectoral inflation; dynamic factor model (search for similar items in EconPapers)
JEL-codes: E31 F42 F62 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2026-08
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2026-64

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