this, as does co- movement in M2 growth. Second, the observed strong co-movement in food prices may be driven disproportionately by specific sub-components—future work could delve into the commonality of weather cycles and inflation rates for different crops, with an emphasis on whether those which are more dependent on rainfall exhibit greater co-movement. Finally, although coreCPIinflationco-movement appears to be weak in most cases, this does not imply that price levels do not move in tandem over time, especially between countries which are more highly
Co-movement (synchronicity) in inflation rates among a set of 13 emerging and developing countries in Asia is shown to be strongest for the food component, partly due to common rainfall shocks—a result which the paper terms the ‘monsoon effect.’ Economies with higher trade integration and co-movement in nominal effective exchange rates also experience greater food-inflation co-movement. By contrast, cross-country co-movement in core inflation is weak and the aforementioned determinants have little explanatory power, suggesting a prominent role for idiosyncratic domestic factors in driving core inflation. In the context of the growing literature on the globalization of inflation, these results suggest that common weather patterns are partly responsible for any role played by a so-called ‘global factor’ among inflation rates in emerging and developing economies, in Asia at least.