Trade Linkages, Balance Sheets, and Spillovers

Trade Linkages, Balance Sheets, and Spillovers
Author: Selim Elekdag
Publisher: International Monetary Fund
Total Pages: 30
Release: 2013-10-14
Genre: Business & Economics
ISBN: 1484355180

Germany and the Czech Republic, Hungary, Poland, and Slovakia (the CE4) have been in a process of deepening economic integration which has lead to the development of a dynamic supply chain within Europe—the Germany-Central European Supply Chain (GCESC). Model-based simulations suggest two key policy implications: First, as a reflection of strengthening trade linkages, German fiscal spillovers to the CE4 and more broadly to the rest of the euro area, have increased over time, but are still relatively small. This is explained by the supply chain nature of trade integration: final demand in Germany is not necessarily the main determinant of CE4 exports to Germany. Second, increased trade openness in both Germany and the CE4 implies a greater exposure of the GCESC to global shocks. However, owing to its strong fundamentals—including sound balance sheets and its safe haven status— Germany plays the role of a regional anchor of stability by better absorbing shocks from other trading partners instead of amplifying their transmission across the GCESC.

Trade Tensions, Global Value Chains, and Spillovers

Trade Tensions, Global Value Chains, and Spillovers
Author: Raju Huidrom
Publisher: International Monetary Fund
Total Pages: 76
Release: 2019-06-12
Genre: Business & Economics
ISBN: 1498319017

Europe is deeply integrated into global value chains and recent trade tensions raise the question of how European economies would be affected by the introduction of tariffs or other trade barriers. This paper estimates the impact of trade shocks and growth spillovers using value added measures to better gauge the associated costs across European countries.

Global Supply Chain Pressures, International Trade, and Inflation

Global Supply Chain Pressures, International Trade, and Inflation
Author: Julian Di Giovanni
Publisher:
Total Pages: 0
Release: 2022
Genre: Business logistics
ISBN:

"We study the effects of the Covid-19 pandemic on the Euro Area inflation in comparison to other countries such as the United States over the two year period 2020-21. Our model-based calibration exercises deliver four key results: 1) Compositional effects – the switch from services to goods consumption – are amplified through global input-output linkages, affecting both trade and inflation. 2) International trade did not respond to changes in GDP as strongly as it did during the 2008-09 crisis despite strong demand for goods. These lower trade elasticities in part reflect supply chain bottlenecks. 3) Inflation can be higher under sector-specific labor shortages relative to a scenario with no such supply shocks. 4) Foreign shocks and global supply chain bottlenecks played an outsized role relative to domestic aggregate demand shocks in explaining Euro Area inflation over 2020-21. These four results imply that policies aimed at stimulating aggregate demand would not have produced as high an inflation as the one observed in the data without the negative sectoral supply shocks."--Abstract.

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
Total Pages: 42
Release: 2022-12-09
Genre: Business & Economics
ISBN:

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.

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
Total Pages: 31
Release: 2024-04-05
Genre: Business & Economics
ISBN:

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.

Supply Bottlenecks: Where, Why, How Much, and What Next?

Supply Bottlenecks: Where, Why, How Much, and What Next?
Author: Oya Celasun
Publisher: International Monetary Fund
Total Pages: 51
Release: 2022-02-17
Genre: Business & Economics
ISBN:

Supply constraints hurt the economic recovery and boosted inflation in 2021. We find that in the euro area, manufacturing output and GDP would have been about 6 and 2 percent higher, respectively, and half of the rise in manufacturing producer price inflation would not have occurred in the absence of supply bottlenecks. Globally, shutdowns can explain up to 40 percent of the supply shocks. Sectors that are more reliant on differentiated inputs—such as autos—are harder hit. Late last year industry experts expected supply shortages for autos to largely dissipate by mid-2022 and broader bottlenecks by end-2022, but given the Omicron wave, disruptions will last for longer, possibly into 2023. With supply constraints adding to price pressures, the challenge for policymakers is to support recovery without allowing high inflation to become entrenched.

The Functioning of the Food Supply Chain and Its Effect on Food Prices in the European Union

The Functioning of the Food Supply Chain and Its Effect on Food Prices in the European Union
Author: Lina Bukeviciute
Publisher:
Total Pages: 50
Release: 2009
Genre: European Union countries
ISBN:

The sharp fluctuations in food price inflation at a time of great uncertainty about the economic outlook have raised questions about the functioning of the European food supply chain. While the observed changes in food prices in EU Member States can be linked to developments in the global demand and supply for agricultural commodities, inefficiencies in the functioning of the food supply chain, in terms of competition and regulation, may have played an important role as well. In particular, an analysis of the transmission mechanisms linking agricultural commodity prices with producer and consumer prices shows that the shock caused by the upsurge in agricultural commodities and energy prices in the second half of 2007 and the first half of 2008 was absorbed differently across EU Member States. Crosscountry differences in the regulatory framework appear to have contributed to this fragmentation of the European Single Market. Moreover, there are indications of differences in the conditions of competition across Member States. Finally, consolidation is taking place throughout the food supply chain. While such consolidation can lead to efficiency gains, it may also worsen the conditions of competition to the detriment of consumers and businesses. Keywords: Food, regulation, market structure, competition, pricing. -- (provided by publisher).

World Trade Evolution

World Trade Evolution
Author: Lili Yan Ing
Publisher: Routledge
Total Pages: 442
Release: 2018-10-08
Genre: Business & Economics
ISBN: 1351061526

The book provides theoretical and empirical evidence on how world trade evolves, how trade affects resource allocation, how trade competition affects productivity, how China shock affects world trade and how trade affects large and small countries. It is a useful reference which focuses on new approaches to international trade by looking into country-specific as well as firm-product level-specific cases.