The (Dis)Equalizing Effects of Production Networks

Abstract

We suggest and empirically substantiate that the global production network constitutes an important variable for inflation inequality, as it modulates the impact of cost-push shocks on households. For most price shocks, the production network reduces inflation inequality, however, at the expense of lower-income households. Introducing a synthetic Consumer Price Index indicates lower-income households to be at the losing end of the overall effect of supply-side price shocks

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