The transmission of Supply Shocks to inflation: The case of Argentina (2004-2023)

Lucas Sebastián Ordoñez

No 4750, Asociación Argentina de Economía Política: Working Papers from Asociación Argentina de Economía Política

Abstract: This paper investigates how domestic and external supply shocks influence inflation in Argentina using the Local Projections methodology. We 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 insights offer a comprehensive understanding of how supply shocks influence inflationary processes in developing countries and small open economies, similar to Argentina.

JEL-codes: C1 E3 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2024-11
New Economics Papers: this item is included in nep-mon
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