The transmission of supply shocks to inflation: the case of Argentina (2004-2022)

My four main results show that both domestic and external supply shocks have a positive influence on inflation after one year: (i) the cumulative response of inflation to an exchange rate shock is 0.495 percentage points; (ii) the cumulative response of inflation to a regulated prices shock is 0.354 percentage points; (iii) the cumulative response of inflation to an energy prices shock is 0.055 percentage points; and (iv) the cumulative response of inflation to a food prices shock is 0.125 percentage points. These results demonstrate significant variations in the magnitude of the impact and in the dynamics of how these supply shocks are transmitted to inflation.