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Applying the input–output price model to identify inflation processes

Author

Listed:
  • Michał Przybyliński

    (University of Łódź)

  • Artur Gorzałczyński

    (University of Łódź)

Abstract

We try to examine the potential of input–output price model to identify mechanisms of price formation and transmission. Contrary to previous research that focused on overcoming the specific limitations of the model, we test its overall performance. In the presented study, the historical values of the commonly used consumer price index were decomposed according to the classic input–output price model for an open economy. A sequence of ex post simulations under various assumptions was used to identify the sources of inflation. This study required the use of input–output tables in current and previous year’s prices. The proposed method of decomposition might be a starting point to create a framework for studying different aspects of inflation process.

Suggested Citation

  • Michał Przybyliński & Artur Gorzałczyński, 2022. "Applying the input–output price model to identify inflation processes," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 11(1), pages 1-11, December.
    • Handle: RePEc:spr:jecstr:v:11:y:2022:i:1:d:10.1186_s40008-022-00264-w
    DOI: 10.1186/s40008-022-00264-w
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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