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Global drivers of inflation: The role of supply chain disruptions and commodity price shocks

Author

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  • Diaz, Elena Maria
  • Cunado, Juncal
  • de Gracia, Fernando Perez

Abstract

The determinants of inflation rates have been extensively studied with no clear consensus. Recent research highlights the growing influence of global supply factors, notably supply chain disruptions and commodity price shocks. This paper analyzes the changing impact of these global supply chain disruptions and commodity price shocks, compared to demand shocks, on inflation rates in Germany, Japan, the U.K., and the U.S. from 1998 to 2022. The findings reveal that since the mid-2010s, supply shocks have become the predominant drivers of inflation. After the Global Financial Crisis, commodity price shocks significantly affected inflation in Germany, the U.K., and the U.S., while the influence of global supply chain disruptions on inflation in all four countries surged following the COVID-19 pandemic.

Suggested Citation

  • Diaz, Elena Maria & Cunado, Juncal & de Gracia, Fernando Perez, 2024. "Global drivers of inflation: The role of supply chain disruptions and commodity price shocks," Economic Modelling, Elsevier, vol. 140(C).
    • Handle: RePEc:eee:ecmode:v:140:y:2024:i:c:s0264999324002177
    DOI: 10.1016/j.econmod.2024.106860
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    More about this item

    Keywords

    Supply chain disruptions; Commodity price shocks; Inflation rates; SVAR model;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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