The international dimension of trend inflation

A trend-cycle BVAR decomposition investigates the role of different slow-moving trends – i.e., globalization, expectations, automation, labor demand and supply – in shaping the slow-moving dynamics of trend inflation. Despite well-anchored expectations, slow-moving imported “cost-push” factors induc...

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Bibliographic Details
Published in:	Journal of international economics Vol. 148; p. 103896
Main Authors:	Ascari, Guido, Fosso, Luca
Format:	Journal Article
Language:	English
Published:	Elsevier B.V 01-03-2024
Subjects:	Global inflation Phillips curve Trend inflation Trend-cycle decomposition C11 E31 C32 E52 Trend inflation Global inflation Trend-cycle decomposition E3 Phillips curve
Online Access:	Get full text
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Summary:	A trend-cycle BVAR decomposition investigates the role of different slow-moving trends – i.e., globalization, expectations, automation, labor demand and supply – in shaping the slow-moving dynamics of trend inflation. Despite well-anchored expectations, slow-moving imported “cost-push” factors induced disinflationary pressure keeping trend inflation below target. The cycle block provides evidence of inflation volatility increasingly driven by international factors. These results can explain why, from 2000 in the U.S. and before the recent surge, inflation remained both below target and silent to domestic slack.
ISSN:	0022-1996
DOI:	10.1016/j.jinteco.2024.103896