Working Paper: CEPR ID: DP16526
Authors: Stefan Gerlach; Rebecca Stuart
Abstract: This paper uses annual data to study the interaction of consumer and commodity prices in 15 economies over the period 1850-1913. We find that consumer price inflation in all 15 countries co-moves with a broad measure of changes in commodity prices. Consumer prices comove most strongly with changes in metal prices, in particular pig iron prices. Furthermore, changes in pig iron prices and production, which have attracted much attention in the literature on 19th century US business cycles, co-move with the international business cycle, suggesting that pig iron prices offer a transmission channel through which international business cycle movements affect inflation.
Keywords: commodity prices; gold standard; global inflation; pig iron
JEL Codes: E31; F40; N10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Commodity prices (Q02) | Consumer price inflation (E31) |
| Pig iron prices (L61) | Consumer price inflation (E31) |
| Pig iron prices (L61) | Commodity prices (Q02) |
| International business cycle (F44) | Pig iron prices (L61) |
| Commodity prices (Q02) | Inflation (by country) (E31) |