The inflation process

This paper documents three major and favourable inflation dynamics in emerging market economies (EMEs). First, the level of inflation has moderated in EMEs and has been broadly stable since the early 2000s. Second, inflation persistence has declined over the past decade. Third, EME exchange rate pass-through, both short-term and long-term, has also declined after the financial crisis. In addition, the paper shows that the role of global factors on inflation is larger for EMEs that are more open to trade.Full Publication: Inflation Mechanisms, Expectations and Monetary Policy