Is Inflation Domestic or Global? Evidence from Emerging Markets

IMF Working Papers, November 8, 2018

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Is Inflation Domestic or Global? Evidence from Emerging Markets

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Bibliographic details

• Authors: Rudolfs Bems, Francesca Caselli, Francesco Grigoli, Bertrand Gruss, Weicheng Lian
• Published: November 8, 2018
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781484381595.001

Overview

• Following a period of disinflation during the 1990s and early 2000s, inflation in emerging markets has remained remarkably low and stable.
• Research question: Was this decline related to a global disinflation environment triggered by China's integration into world trade and broader globalization, or to better domestic policies?
• Sample: 19 large emerging markets examined over the past couple of decades.
• Method: Review of inflation performance and quantification of the impact of domestic and global factors in determining inflation.

Key empirical findings

• The level, volatility, and persistence of inflation declined significantly, albeit not uniformly across the sample.
• Longer-term inflation expectations, linked to domestic factors, were identified as the main determinant of inflation.
• External factors played a considerably smaller role in explaining inflation outcomes in the sample.

Policy implications and relevance

• Results provide evidence for emerging markets as they craft monetary policies to navigate future shifts in global financial conditions.
• Emphasis on domestic policy credibility and anchoring of longer-term inflation expectations as central for maintaining low and stable inflation.

Additional notes from the publication landing page

• Authors: Rudolfs Bems, Francesca Caselli, Francesco Grigoli, Bertrand Gruss, Weicheng Lian.
• Date of publication: November 8, 2018.
• Series: IMF Working Papers, Working Paper No. 2018/241.
• Pages: 26.
• DOI: https://doi.org/10.5089/9781484381595.001

Source: "Is Inflation Domestic or Global? Evidence from Emerging Markets", IMF Working Paper No. 2018/241 (November 8, 2018).

Content in this bundle

• Is Inflation Domestic or Global?Evidence from Emerging Markets, WP/18/241, November 2018
  • Is Inflation Domestic or Global?Evidence from Emerging Markets, WP/18/241, November 2018 (Markdown version)
  • Is Inflation Domestic or Global?Evidence from Emerging Markets, WP/18/241, November 2018 (PDF)