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Mr. Serhan Cevik

is substantial heterogeneity in the instantaneous quasi-correlation of inflation subcomponents between city pairs; and (iii) there are significant changes in the degree of synchronization across cities over time, reflecting important economic developments in history such as the global financial crisis, the adoption of euro, and the COVID-19 pandemic. The granular evidence presented in this paper indicates that city-level inflation cycles and pricing behavior in Lithuania still lack full synchronization . This may reflect a range of factors including

Mr. Serhan Cevik
The post-pandemic rise in consumer prices across the world has renewed interest in inflation dynamics after decades of global disinflation. This paper provides a spatial investigation of inflation synchronicity at the city level in Lithuania using disaggregated monthly data during the period 2000–2021. The empirical analysis provides strong evidence that (i) the co-movement of city-level inflation rates—estimated using the instantaneous quasi-correlation approach—is significantly weaker than the extent of synchronization suggested by the simple correlation analysis; (ii) there is substantial heterogeneity in the instantaneous quasi-correlation of inflation subcomponents between city pairs; and (iii) there are significant changes in the degree of city-level synchronization over time, reflecting important economic developments in history such as the global financial crisis, the adoption of euro, and the COVID-19 pandemic.
Mr. Serhan Cevik

) there is substantial heterogeneity in the instantaneous quasi-correlation of inflation subcomponents between city pairs; and (iii) there are significant changes in the degree of city-level synchronization over time, reflecting important economic developments in history such as the global financial crisis, the adoption of euro, and the COVID-19 pandemic. ISBN 978–1-51358-###-# (Paper) 978–1-51358-###-# (ePub) 978–1-51358-###-# (PDF) JEL Classification Numbers: C13; C21; C22; E31 Keywords: Inflation synchronization; subnational

International Monetary Fund. African Dept.

, 2011 ). C. Econometric Evidence in the Case of Togo Persistence of headline, food and core inflation Recently, Walsh (2011) and Thamae and Letsoela (2014) have argued that for the purposes of monetary policy, central banks should analyze headline inflation and its sub-components taking into account their persistence and their level of pass-through to different sectors of the economy, and not only their relative volatility. The persistence of inflation sub-components is important because it has an impact on the duration of a shock to a specific

International Monetary Fund. European Dept.

Driving Estonia’s Inflation 20. A more granular analysis of inflation subcomponents could throw light on an important question of whether the recent spike in prices could morph into sustained inflationary pressure. In this regard, a key factor to consider is that of the wage price spiral. However, comprehensively assessing the potential for such a spiral would involve an analysis of the determinants of not only prices but wages. The latter goes beyond the scope of this paper, which is limited to the narrower investigation of the determinants of prices. Within this

International Monetary Fund. Asia and Pacific Dept

that the early recovery phase was marked by greater dispersion in how different economic sectors were affected. Looking ahead, it will be important to monitor whether this greater dispersion of inflation outcomes at the sectoral level continues. Fitted Densities of CPI Inflation Subcomponents (Annualized, in percent, m/m) Sources: Statistics Indonesia (BPS); and IMF staff estimates D. Regional CPI Data Point to Broad-Based Disinflation with Some Geographic Differentiation 11. Regional inflation data suggest that the COVID-19 shock has had

International Monetary Fund. Western Hemisphere Dept.

Guatemalan data explain a large share of the inflation variance in Guatemala, they do not tend to explain global variables . Moreover, PCs extracted from global variables do not have an important role explaining Guatemalan inflation. The key results are formally shown in Tables 2 and 3 , which present the estimates of simple regressions of various inflation subcomponents on the extracted principal components. The regressions are of the form: x t = α + Σ i = 1 n β i P C i , t j + ϵ t ( 2 ) Table 2. Guatemala: Guatemalan Extracted Components (PC GTM

Mr. Jan Vlcek and Mikhail Pranovich
National Bank of Rwanda (BNR) modernized monetary policy and transited to the price-based policy framework in January 2019. The Forecasting and Policy Analysis System (FPAS) is the cornerstone for the new forward-looking framework, which mobilizes and organizes resources and sets processes for regular forecasting rounds. The core of this system is a structural macroeconomic model for macroeconomic analysis and projections to support the BNR staff’s policy recommendations to the monetary policy committee. This paper documents the quarterly projection model (QPM) at the core of the FPAS at the BNR. The model is an extension of the canonical structure in Berg et al (2006) to reflect specifics of the interest-rate-based policy framework with a managed exchange rate, the effect of agricultural sector and harvests on prices, and the role of fiscal policies and aid flows.
Mr. Jan Vlcek and Mikhail Pranovich

, cpi F is food component of CPI, and cpi E is for energy component of CPI. The ε cpi , is a measurement error introduced to capture discrepancies that appear due to (i) actual sub-components do not sum up to headline CPI 14 and (ii) weights are constant in the model, while they may be changing over the estimation sample. Core inflation The structure of this equation is similar to that for the headline inflation in the canonical model as in Berg (2006a , b ) but it is written for the core q-o-q inflation subcomponent. It incorporates mechanism for