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Title: To what extent globalization affects inflation: The role of global value chains Authors:  Aleksandra Halka - Narodowy Bank Polski (Poland)
Jan Hagemejer - Narodowy Bank Polski (Poland)
Jacek Kotlowski - SGH Warsaw School of Economics (Poland) [presenting]
Abstract: The aim is to investigate to what extent the globalization process reflected by the increasing participation in the global value chains influences the inflation in various economies. We use the broad panel data set based on World Input-Output Database (WIOD) to check whether the growing trade in intermediate goods first results in lowering domestic inflation and second leads to decrease of exchange rate pass-through (ERPT). We also decompose the exchange rate pass-through to consumer prices into direct and indirect (via domestic producer prices) channel. We find that the growing participation in the GVC results in the reduction of the ERPT as well as the in lowering of the level of overall inflation.