Inflation Targeting Regime and Inflation
Over the past five decades, inflation targeting monetary policy regimes have become widespread, while pegged exchange rate regimes, which were predominant in the 1970s, have receded.
Synchronization in output growth and inflation
Global inflation synchronization has been stronger than global synchronization of output growth, especially in EMDEs. In advanced economies, inflation synchronization has been comparable to, or lower than, output growth synchronization since the mid-1980s.
Contributions of global shocks to domestic inflation
Global shocks account for around a quarter of domestic inflation variation, but considerably more in advanced economies (one-third) than in EMDEs (one-seventh). Since 2001, however, this contribution has grown in all country groups—to more than one-half in advanced economies and one-quarter in EMDEs—as a result of considerably larger global demand shocks.
Global value chain participation and pass-through
Higher global value chain participation is associated with lower pass-throughs in some emerging and developing economies (EMDEs), but the relationship is tenuous across the full sample.
The poverty impact of food price shocks
A high share of agriculture and food in total output and consumption, employment, trade,
and government revenues heighten countries’ vulnerability to volatility in international food prices. Insulating policies introduced during the 2010-11 food price spike accounted for 40 percent of the increase in the world price of wheat and one-quarter of the increase in the world price of maize. Combined with government policy responses, the 2010-11 food price spike increased global poverty by 1 percent or 8.3 million.
