## One Global Shock, Many Inflation Paths: Explaining Post-COVID Inflation Divergence

_IMF Working Papers, May 22, 2026_

## Source details

**Canonical URL:** [One Global Shock, Many Inflation Paths: Explaining Post-COVID Inflation Divergence](https://www.imf.org/en/publications/wp/issues/2026/05/22/one-global-shock-many-inflation-paths-explaining-post-covid-inflation-divergence-576027)

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## Bibliographic details
- Authors: Patrick A. Imam, Tigran Poghosyan
- Published: May 22, 2026
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229045148.001

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### Overview
- Research question: Why did the post-COVID inflation surge, though globally synchronized, produce widely divergent outcomes across countries?
- Scope:
  - Cross-country regressions for 130 economies.
  - Local projections methods for 70 advanced and emerging markets.

### Methods
- Empirical approaches:
  - Cross-country regressions covering 130 economies.
  - Local projections for 70 advanced and emerging markets.
- Focus areas: structural, institutional, and policy determinants of post-pandemic inflation dynamics.

### Key Findings
- Primary drivers of cross-country variation:
  - Historical inflation accounts for most of the cross-country variation in cumulative post-COVID inflation.
  - The scale of domestic energy price shocks accounts for most of the cross-country variation in cumulative post-COVID inflation.
- Limited explanatory power:
  - Many frequently cited country-specific, macroeconomic fundamentals and institutional features exhibit limited power to explain cross-country variation.
- Domestic policy responses:
  - The association between post-COVID inflation and domestic policy responses is weak.
  - Endogeneity complicates a clear causal interpretation of policy effects.
- Pass-through dynamics:
  - Pass-through from energy prices to headline inflation intensified markedly in the post-COVID period.
  - This intensified pass-through is particularly notable in:
    - Emerging markets.
    - Non-inflation-targeting regimes.
    - Countries that did not expand fossil fuel subsidies.
- Implications on transmission:
  - Findings highlight the asymmetric transmission of supply shocks.
  - Credibility, historical inflation experience, and energy policy design are important in shaping inflation persistence.

### Policy Implications and Recommendations
- Strengthen central bank credibility.
- Anchor expectations to bolster resilience against future global supply disruptions.
- Consider energy policy design, including the role of fossil fuel subsidies, given their interaction with pass-through dynamics.

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_Source: https://www.imf.org/en/publications/wp/issues/2026/05/22/one-global-shock-many-inflation-paths-explaining-post-covid-inflation-divergence-576027_