Pandemic-Era Inflation Drivers and Global Spillovers

58 Pages Posted: 27 Nov 2023

See all articles by Julian di Giovanni

Julian di Giovanni

Federal Reserve Banks - Federal Reserve Bank of New York; Centre for Economic Policy Research (CEPR)

Sebnem Kalemli-Ozcan

University of Maryland

Alvaro Silva

University of Maryland

Muhammed Ali Yildirim

Harvard University - Harvard Kennedy School (HKS)

Multiple version iconThere are 3 versions of this paper

Date Written: November 01, 2023

Abstract

We employ a multi-country multi-sector New Keynesian model to analyze the factors driving pandemic-era inflation. The model incorporates both sector-specific and aggregate shocks, which propagate through the global trade and production network and generate demand and supply imbalances, leading to inflation and spillovers. The baseline quantitative exercise matches changes in aggregate and sectoral prices and wages for a sample of countries including the United States, Euro Area, China, and Russia. Our findings indicate that supply-chain bottlenecks ignited inflation in 2020, followed by a surge in prices driven by aggregate demand shocks from 2021 through 2022, exacerbated by rising energy prices.

Keywords: inflation, international spillovers, global production network

JEL Classification: E2, E3, E6, F1, F4

Suggested Citation

di Giovanni, Julian and Kalemli-Ozcan, Sebnem and Silva, Alvaro and Yildirim, Muhammed Ali, Pandemic-Era Inflation Drivers and Global Spillovers (November 01, 2023). FRB of New York Staff Report No. 1080, Rev. July 2024, https://doi.org/10.59576/sr.1080 , Available at SSRN: https://ssrn.com/abstract=4641566 or http://dx.doi.org/10.2139/ssrn.4641566

Julian Di Giovanni (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

HOME PAGE: http://julian.digiovanni.ca

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

HOME PAGE: http://julian.digiovanni.ca

Sebnem Kalemli-Ozcan

University of Maryland ( email )

College Park
College Park, MD 20742
United States

Alvaro Silva

University of Maryland ( email )

Muhammed Ali Yildirim

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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