## Global Value Chain and Inflation Dynamics

_IMF Working Papers, March 22, 2024_

## Source details

**Canonical URL:** [Global Value Chain and Inflation Dynamics](https://www.imf.org/en/publications/wp/issues/2024/03/22/global-value-chain-and-inflation-dynamics-546651)

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- [Markdown version](/en/publications/wp/issues/2024/03/22/global-value-chain-and-inflation-dynamics-546651/index.md)
- [Structured JSON version](/en/publications/wp/issues/2024/03/22/global-value-chain-and-inflation-dynamics-546651/index.json)
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## Bibliographic details
- Authors: Vu Chau, . Marina Conesa Martinez, Taehoon Kim, John A Spray
- Published: March 22, 2024
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400268847.001

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### Data and Methodology
- Novel harmonized dataset of sectoral producer price inflation and input-output linkages for more than 1000 sectors in 53 countries.
- Identification strategy: Bartik shift-share design, where shares reflect heterogeneous sectoral exposure to shocks and are derived from a macroeconomic model of international production network.

### Key Findings
- Pandemic lockdowns, and subsequent reopening policies, were the most dominant driver of global inflation during 2020-2022, especially through their impact on aggregate demand.
- Between 20-30 percent of the demand effect of lockdown/reopening is due to spillover from abroad.
- Fiscal and monetary policies played an important role in preventing deflation in 2020, but their effects diminished in the recovery years.

### Policy-Relevant Insights
- Demand-side disruptions from lockdowns and reopenings can transmit internationally through global value chains; cross-border spillovers account for 20-30 percent of the demand effect.
- While timely fiscal and monetary stimulus helped avert deflation in 2020, reliance on these policies may yield diminishing returns during subsequent recovery phases.

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## Content in this bundle

- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2024/03/22/global-value-chain-and-inflation-dynamics-546651_