Presenter: Veronica De Falco
Affiliation: Imperial College London, Business School.
Paper available soon.
Date: March 25, 2024.
Time: 13:00 GMT (15:00 Israel Time)
Abstract: The 2021–2023 inflation surge was characterized by inflation rising in many countries simultaneously due to a mix of, domestic and foreign, supply and demand factors. I investigate the impact of an increase in import prices on domestic inflation. I use monthly bilateral trade data by country-industry for which both the quantity and prices of imported goods are reported at the 4- digits commodity level. I propose a shift-share Bartik-style instrument to estimate the elasticity of domestic inflation to import prices. The quasi-exogenous variation is based on exposure to global import prices of products across countries. Preliminary results show that a 1% increase in import prices increases domestic inflation by 6-10 basis points.