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How Do Trade Disruptions Affect Inflation? Accessible Data
Figure 1. Evolution of Global Imports of Goods
This figure is a line chart with two lines showing trade as a share of world GDP. The blue dashed line shows total world trade from 1990 to 2022, while the red line shows trade in intermediate foods from 1996 to 2022. The y-axis ranges between 0 to 0.25. One notable features of the chart is the peak of trade before the Global Financial Crisis (GFC) at around 0.23 of world GDP and the following plateauing of the data. Total world trade sits around 0.21 of world GDP post GFC, while trade in intermediate goods sits around 0.11 of world GDP. The other notable feature is that trade in intermediate goods tends to sit around 50 percent of total trade as a share of world GDP.
Note: Total trade is from 1990 to 2022, and trade in intermediates is from 1996 to 2022.
Source: Ricardo Reyes-Heroles, Sharon Traiberman, and Eva Van Leemput (2020), “Emerging Markets and the New Geography of Trade: The Effects of Rising Trade Barriers,” IMF Economic Review, vol. 68 (July), pp. 456-508, extended for 1990 to 1995 by World Integrated Trade Solution and World Development Indicators and for 2017 to 2022 by UN Comtrade and the International Monetary Fund’s World Economic Outlook. Data for trade in intermediates at Broad Economic Categories classification provided by UN Comtrade starting in 1996. Data for 2021 are linearly interpolated because of limited reporting.
Figure 2. Changes in Measured Bilateral Trade Costs
This figure is comprised of two bar charts. The left chart shows changes in median bilateral trade cost and the right chart shows changes in U.S.-China Bilateral Trade Cost. Both charts show the percentage point change for intermediate and final goods in red and gray respectively. The x-axis has three regimes: 1995-2008, 2008-2018 and 2018-2019. The y-axis for both ranges from -90 to 30. In the case of the left chart, both intermediate and final trade costs decreased around -90 to -75 percentage points from 1995-2008, with intermediate costs decreasing more. In the 2008-2018 regime median bilateral trade costs decreased around -11 to -10 percentage points. Finally, in 2018-2019 the intermediate goods cost decreased -2 percentage points, while the final goods increased around 3 percentage points. In the right chart both intermediate and final goods decreased around -73 to -70 percentage points. In 2008-2018, costs stayed relatively the same between both types of goods, with the cost of intermediates slightly increasing around 1 percentage point and final goods decreasing around 1 percentage point. Finally, during the 2018-2019 regime trade costs in intermediate goods increased by 20 percentage points and trade in final goods increased by 10 percentage points.
Source: Inter-Country Input-Output Tables, Organization for Economic Co-operation and Development; FRB staff calculations.
Figure 3. Effects on CPI Inflation of Higher Trade Costs
The figure is comprised of two line charts. Both charts show the percentage point change between -0.25 and 1 on the y-axis and the years between 0 and 5 on the x-axis. The charts both have a solid black line that shows the percentage point change across the years with a shaded area around the line that represents the 70 percent confidence intervals. The chart on the left shows the CPI response to trade costs in intermediate goods. The black line starts above 0.25 percentage point change for years 0 to 1, then decreases to slightly above 0 percentage point change for years 2 to 5. The chart on the right shows the CPI response to trade costs in final goods. The black line starts around 0.50 in year 0, then steadily decreases to 0 in year 3. It remains near 0 from years 3 to 5.
Note: The figure shows the consumer price index (CPI) response to a 10 percentage point increase in trade costs. Solid lines show the average response across countries. Shaded areas show the 70 percent confidence intervals.
Source: Inter-Country Input-Output Tables, Organization for Economic Co-operation and Development; World Development Indicators, World Bank; FRB staff calculations.
Figure 4. Effects of U.S.-China Trade Tensions
The figure is comprised of two stacked bar charts. Both charts show the 4-quarter percentage point change between -0.7 and 0.7 on the y-axis and the quarter between 0 and 11 on the x-axis. The red bars represent the contribution of trade costs in intermediate goods, while the gray bars represent the contribution of trade costs in final goods. A black line that represents the U.S.-China trade tensions show the net 4-quarter percent change of the red and gray bars. The chart on the left shows the U.S. PCE Prices. The gray bars remain around 0.3, until quarter 5 where they remain near 0, while the red bars steadily increase from around 0.05 to 0.2 until quarter 5 then steadily decrease back to 0.05. The chart on the right shows the U.S. Real GDP. The gray bars decrease from -0.1 to -0.3 between quarters 1 and 4. They then increase to around 0.2 by quarter 10, becoming positive in quarter 6. The red bars are positive though near 0 in quarter 1, but steadily decrease to 0.3 in quarter 5. They then increase to around 0.1 in quarter 10, becoming positive in quarter 9.
Note: Results are shown as deviations from a baseline in which trade costs do not increase. PCE is personal consumption expenditures.
Source: FRB staff calculations.