IMF Working Papers

Beyond Energy: Inflationary Effects of Metals Price Shocks in Production Networks

By Jorge Miranda-Pinto, Andrea Pescatori, Martin Stuermer, Xueliang Wang

October 22, 2024

Download PDF More Formats on IMF eLibrary Order a Print Copy
More formats on IMF eLibrary Order a Print Copy

Preview Citation

Format: Chicago

Jorge Miranda-Pinto, Andrea Pescatori, Martin Stuermer, and Xueliang Wang. "Beyond Energy: Inflationary Effects of Metals Price Shocks in Production Networks", IMF Working Papers 2024, 215 (2024), accessed October 25, 2024, https://doi.org/10.5089/9798400291630.001

Export Citation

  • ProCite
  • RefWorks
  • Reference Manager
  • BibTex
  • Zotero
  • EndNote

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

We examine the role of metals as economic inputs by using a production network model, calibrated for various countries using input-output (I-O) tables. Empirically, we employ local projections to study how metal shocks influence inflation, testing country-level heterogeneity in the sensitivity to these shocks. Our findings indicate that metals price shocks have significant and persistent effects on core and headline inflation, with particularly pronounced effects on countries that are highly exposed to metals in their production networks. This is in contrasts to oil supply shocks, which predominantly affect headline inflation. A shift of the global economy towards a higher relative metals intensity due to the energy transition could lead to commodity price shocks increasingly influencing core rather than headline inflation. This could make commodity price shocks less visible on impact but more persistent. Central banks should consider this shift when assessing inflation dynamics and risks.

Subject: Commodities, Economic theory, Inflation, Metal prices, Metals, Oil, Oil prices, Oil production, Prices, Production, Supply shocks

Keywords: Global, Inflation, Inflation, International macroeconomics, Metal prices, Metals, Metals, Oil, Oil prices, Oil production, Production networks, Supply shocks, Supply shocks.

Publication Details

You May Also Be Interested In...

IMF

The Managing Director's Global Policy Agenda, Annual Meetings 2024: Secure A Soft Landing And Break From The Low Growth–High Debt Path

October 24, 2024

Development Committee: The Managing Director's Written Statement

October 22, 2024

Republic of Türkiye: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Türkiye

October 11, 2024

What Can Artificial Intelligence Do for Stagnant Productivity in Latin America and the Caribbean?

October 11, 2024