Here Comes the Change: The Role of Global and Domestic Factors in Post-Pandemic Inflation in Europe
Here Comes the Change: The Role of Global and Domestic Factors in Post-Pandemic Inflation in Europe

Author: Mahir Binici

Publisher: International Monetary Fund

Published: 2022-12-09

Total Pages: 42

ISBN-13:

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Global inflation has surged to 7.5 percent in August 2022, from an average of 2.1 percent in the decade preceding the COVID-19 pandemic, threatening to become an entrenched phenomenon. This paper disentangles the confluence of contributing factors to the post-pandemic rise in consumer price inflation, using monthly data and a battery of econometric methodologies covering a panel of 30 European countries over the period 2002-2022. We find that while global factors continue to shape inflation dynamics throughout Europe, country-specific factors, including monetary and fiscal policy responses to the crisis, have also gained greater prominence in determining consumer price inflation during the pandemic period. Coupled with increasing persistence in inflation, these structural shifts call for significant and an extended period of monetary tightening and fiscal realignment.

Reimagining Systems Thinking in a Post-Pandemic World
Reimagining Systems Thinking in a Post-Pandemic World

Author: Azukas, M. Elizabeth

Publisher: IGI Global

Published: 2023-07-03

Total Pages: 345

ISBN-13: 1668472864

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The COVID-19 pandemic caused the largest systemic disruption in history. The pandemic was a complex phenomenon that impacted economic, political, and education systems. The pandemic had widespread business impacts, having forced many businesses to close, and the world is still impacted by the effects of supply chain disruptions. The pandemic also impacted political systems with disputes over mask mandates, lockdowns, and vaccine distribution. The COVID-19 pandemic further caused the most extensive education system disruption in history. The pandemic has highlighted the world’s complex interdependent structures, and it will require a multidisciplinary systems thinking approach for post-pandemic recovery and future pandemic prevention. Reimagining Systems Thinking in a Post-Pandemic World examines the role of systems thinking in a post-pandemic world. It identifies effective models of systems thinking and destems design and generates continuous knowledge building on systems thinking by addressing a multitude of industries and service communities. This book provides value in understanding the complexities of an interconnected world and in the exploration of effective approaches to systems thinking and design. Covering topics such as blended learning, local governments, and systems thinking, this premier reference source is an excellent resource for practitioners, policymakers, healthcare providers, business leaders and managers, educators of both K-12 and higher education, pre-service teachers, administrators and faculty, teacher educators, sociologists, librarians, researchers, and academicians.

High Inflation in the Baltics: Disentangling Inflation Dynamics and Its Impact on Competitiveness
High Inflation in the Baltics: Disentangling Inflation Dynamics and Its Impact on Competitiveness

Author: Alice Fan

Publisher: International Monetary Fund

Published: 2024-03-15

Total Pages: 35

ISBN-13:

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This paper identifies and quantifies the drivers of inflation dynamics in the three Baltic economies and assesses the effectiveness of fiscal policy in fighting inflation. It also analyzes the macroeconomic impact of inflation on competitiveness by focusing on the relationship between wages and productivity in the tradeable sector. The results reveal that inflation in the Baltics is largely driven by global factors, but domestic demand matters as well, suggesting that fiscal policy can play a role in containing inflation. Also, there is robust evidence of a long-run (cointegration) relationship between (real) wages in the tradeable (manufacturing) sector and productivity in the Baltics with short-term deviations self-correcting in Estonia and Lithuania only.

The 2020-2022 Inflation Surge Across Europe: A Phillips-Curve-Based Dissection
The 2020-2022 Inflation Surge Across Europe: A Phillips-Curve-Based Dissection

Author: Chikako Baba

Publisher: International Monetary Fund

Published: 2023-02-10

Total Pages: 25

ISBN-13:

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In 2021-22, inflation in Europe soared to multidecade highs, consistently exceeding policymakers’ forecasts and surprising with its wide cross-country dispersion. This paper analyzes the key drivers of the inflation surge in Europe and its variation across countries. The analysis highlights significant differences in Phillips curve parameters across Europe’s economies. Inflation is more sensitive to domestic slack and external price pressures in emerging European economies compared to their advanced counterparts, which contributed to a greater passthrough of global commodity price shocks into domestic prices, and, consequently, to larger increases in inflation rates. Across Europe, inflation also appears to have become increasingly backward looking and more sensitive to commodity price shocks since the onset of the COVID-19 pandemic. This finding helps explain why conventional (Phillips curve) inflation models consistently underpredicted the 2021-2022 inflation surge, although it remains too early to conclude there has been a structural break in the inflation process.

Global Trends 2040
Global Trends 2040

Author: National Intelligence Council

Publisher: Cosimo Reports

Published: 2021-03

Total Pages: 158

ISBN-13: 9781646794973

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"The ongoing COVID-19 pandemic marks the most significant, singular global disruption since World War II, with health, economic, political, and security implications that will ripple for years to come." -Global Trends 2040 (2021) Global Trends 2040-A More Contested World (2021), released by the US National Intelligence Council, is the latest report in its series of reports starting in 1997 about megatrends and the world's future. This report, strongly influenced by the COVID-19 pandemic, paints a bleak picture of the future and describes a contested, fragmented and turbulent world. It specifically discusses the four main trends that will shape tomorrow's world: - Demographics-by 2040, 1.4 billion people will be added mostly in Africa and South Asia. - Economics-increased government debt and concentrated economic power will escalate problems for the poor and middleclass. - Climate-a hotter world will increase water, food, and health insecurity. - Technology-the emergence of new technologies could both solve and cause problems for human life. Students of trends, policymakers, entrepreneurs, academics, journalists and anyone eager for a glimpse into the next decades, will find this report, with colored graphs, essential reading.

Is Inflation Good for Business? The Firm-Level Impact of Inflation Shocks in the Baltics, 1997-2021
Is Inflation Good for Business? The Firm-Level Impact of Inflation Shocks in the Baltics, 1997-2021

Author: Mr. Serhan Cevik

Publisher: International Monetary Fund

Published: 2024-03

Total Pages: 23

ISBN-13:

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Using a large panel of firm-level data, this paper provides an analysis of how inflation shocks in the Baltics between 1997 and 2021 affected total factor productivity (TFP), gross profitability, and net fixed investment in nonfinancial sectors. First, we find that inflation and inflation volatility had mixed effects on TFP growth, profitability and net fixed investment in the first year as well as over the medium term, albeit at a dissipating rate. Second, focusing on subsamples, we find that inflation shocks had differential effects on large versus small firms. Third, we explore sectoral heterogeneity in how firms responded to inflation shocks and observe significant variation across tradable and non-tradable sectors. Finally, estimates from a state-dependent model suggest that firms’ response to inflation shocks varied with the state of the economy. The results suggest that nonfinancial firms in the Baltics have been agile in adjusting to inflation shocks, possibly by either transferring higher production costs to consumers or substituting inputs. Given the differences in the level and nature of the recent inflation shock and the sample period on which our analysis is based, empirical findings presented in this paper might not necessarily apply to the latest bout of inflation in the Baltics.

It’s Never Different: Fiscal Policy Shocks and Inflation
It’s Never Different: Fiscal Policy Shocks and Inflation

Author: Mr. Serhan Cevik

Publisher: International Monetary Fund

Published: 2023-05-12

Total Pages: 37

ISBN-13:

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This paper investigates the impact of fiscal shocks on inflation, using a large panel of 139 countries over the period 1970–2021. First, both headline and core measures of inflation increase in response to expansionary shifts in the fiscal policy stance. Second, we split the sample and observe an intriguing pattern that fiscal policy shocks are primarily significant in developing countries. Third, the inflationary impact of fiscal policy shocks is dependent on fiscal space and economic conditions, as well as monetary policy type, exchange rate regimes and fiscal rules, at the time of the shock. We confirm these results by using the narrative approach and forecast errors, as well as cyclically- adjusted data on government revenues and non-interest expenditures, to identify exogenous changes in fiscal policy. The analysis has several important policy implications: (i) fiscal policy is a critical anchor of macroeconomic stability; (ii) fiscal policy should be used with care in aggregate demand management as it has significant effects on inflation, which are highly dependent on fiscal space and economic conditions; and (iii) flexible exchange rates and rule-based policymaking provide greater resilience to inflationary shocks.

Republic of Kazakhstan
Republic of Kazakhstan

Author: International Monetary Fund. Middle East and Central Asia Dept.

Publisher: International Monetary Fund

Published: 2024-02-07

Total Pages: 27

ISBN-13:

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Selected Issues

This Is Going to Hurt: Weather Anomalies, Supply Chain Pressures and Inflation
This Is Going to Hurt: Weather Anomalies, Supply Chain Pressures and Inflation

Author: Mr. Serhan Cevik

Publisher: International Monetary Fund

Published: 2024-04-05

Total Pages: 31

ISBN-13:

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As climate change accelerates, the frequency and severity of extreme weather events are expected to worsen and have greater adverse consequences for ecosystems, physical infrastructure, and economic activity across the world. This paper investigates how weather anomalies affect global supply chains and inflation dynamics. Using monthly data for six large and well-diversified economies (China, the Euro area, Japan, Korea, the United Kingdom, and the United States) over the period 1997-2021, we implement a structural vector autoregressive model and document that weather anomalies could disrupt supply chains and subsequently lead to inflationary pressures. Our results—based on high-frequency data and robust to alternative estimation methodologies—show that these effects vary across countries, depending on the severity of weather shocks and vulnerability to supply chain disruptions. The impact of weather shocks on supply chains and inflation dynamics is likely to become more pronounced with accelerating climate change that can have non-linear effects. These findings have important policy implications. Central bankers should consider the impact of weather anomalies on supply chains and inflation dynamics to prevent entrenching second-round effects and de-anchoring of inflation expectations. More directly, however, governments can invest more for climate change adaptation to strengthen critical infrastructure and thereby minimize supply chain disruptions.

Creating Economic Stability Amid Global Uncertainty
Creating Economic Stability Amid Global Uncertainty

Author: Enrique Murillo

Publisher: Springer Nature

Published: 2023-11-20

Total Pages: 262

ISBN-13: 3031413865

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COVID-19 impacted economic activity in a way that hurt households, businesses, industries, and governments. What followed immediately was a period of high uncertainty, and what’s to come is still unknown. Economists have a lot to learn from this point in history, as different countries have handled this very differently from others. This book journeys through what one emerging economy has done to attempt recovery following immense disruption: Mexico's recovery following the pandemic. This volume offers empirical studies that trace the post-pandemic recovery period in Mexico, providing insight into what this emergent economy went through and did after 2021. The first part of the book examines macroeconomics, such as tax collection, and microeconomics, such as household income. These chapters draw on policy and the actions driving the economic recover in this emergent economy. The second half of the book focuses on what organizations can do to improve internal governance as well as market success. Full of new conceptual and empirical studies, the book explains what it looks like to rebuild an emerging economy. It will appeal to economists, economic scholars, and policymakers trying to make sense of the best ways to move forward following intense period of economic instability.