Arbeitspapier
On the wedge between the PPI and CPI inflation indicators
While two strands of the literature suggest that PPI inflation, in addition to or instead of CPI inflation, should be a targeting variable in a monetary policy rule, the distinction between the two is only important when they do not co-move strongly. Our first contribution is to document that their correlation has indeed fallen substantially since the start of this century. Our second contribution is to propose a model to understand this divergence based on expanding global supply chains. Our theory produces additional predictions that are also confirmed in the data. As such changes are structural rather than temporary, the standard monetary policy rule that does not target the PPI inflation may have become increasingly problematic.
- Sprache
-
Englisch
- Erschienen in
-
Series: Bank of Canada Staff Working Paper ; No. 2022-5
- Klassifikation
-
Wirtschaft
Price Level; Inflation; Deflation
Monetary Policy
Central Banks and Their Policies
Neoclassical Models of Trade
Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
Open Economy Macroeconomics
Economic Impacts of Globalization: Macroeconomic Impacts
- Thema
-
Inflation and prices
Inflation targets
International topics
Monetary policy
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Wei, Shang-jin
Xie, Yinxi
- Ereignis
-
Veröffentlichung
- (wer)
-
Bank of Canada
- (wo)
-
Ottawa
- (wann)
-
2022
- DOI
-
doi:10.34989/swp-2022-5
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:45 MEZ
Datenpartner
Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Wei, Shang-jin
- Xie, Yinxi
- Bank of Canada
Entstanden
- 2022
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