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Trade linkages and the globalisation of inflation in Asia and the Pacific

Raphael Auer and Aaron Mehrotra

No 172, Globalization Institute Working Papers from Federal Reserve Bank of Dallas

Abstract: Some observers argue that increased real integration has led to greater co-movement of prices internationally. We examine the evidence for cross-border price spillovers among economies participating in the pan-Asian cross-border production networks. Starting with country-level data, we find that both producer price and consumer price inflation rates move more closely together between those Asian economies that trade more with one another, ie that share a higher degree of trade intensity. Next, using a novel data set based on the World Input-Output Database (WIOD), we examine the importance of the supply chain for cross-border price spillovers at the sectoral level. We document the increasing importance of imported intermediate inputs for economies in the Asia-Pacific region and examine the impact on domestic producer prices of changes in costs of imported intermediate inputs. Our results suggest that real integration through the supply chain matters for domestic price dynamics in the Asia-Pacific region.

Keywords: price level; inflation; deflation; international trade (search for similar items in EconPapers)
JEL-codes: E31 F14 F15 F40 F62 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2014-04-01
New Economics Papers: this item is included in nep-int, nep-mac, nep-opm and nep-sea
Note: Published as: Auer, Raphael and Aaron Mehrota (2014), "Trade Linkages and the Globalisation of Inflation in Asia and the Pacific," Journal of International Money and Finance 49 (Part A): 129-151.
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Related works:
Journal Article: Trade linkages and the globalisation of inflation in Asia and the Pacific (2014) Downloads
Working Paper: Trade linkages and the globalisation of inflation in Asia and the Pacific (2014) Downloads
Working Paper: Trade Linkages and the Globalisation of Inflation in Asia and the Pacific (2014) Downloads
Working Paper: Trade linkages and the globalisation of inflation in Asia and the Pacific (2014) Downloads
Working Paper: Trade linkages and the globalisation of inflation in Asia and the Pacific (2014) Downloads
Working Paper: Trade linkages and the globalisation of inflation in Asia and the Pacific (2014) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddgw:172

DOI: 10.24149/gwp172

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