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GVC participation and inflation in the European Union

Author

Listed:
  • Mariam Camarero

    (University Jaume I and INTECO, Department of Economics, Campus de Riu Sec, E-12080 Castellón, Spain.)

  • Antonia López-Villavicencio

    (Department of Applied Economics, Building B, Office: B3-052, Universitat Autònoma de Barcelona, 08193 Bellaterra, Barcelona, Spain.)

  • Cecilio Tamarit

    (niversity of València and INTECO, Department of Applied Economics II, Av. dels Tarongers, s/n Eastern Department Building, E-46022 Valencia, Spain.)

Abstract

This paper examines how participation in global value chains (GVCs) shapes in- flation in the European Union over 1995–2023. Using local projections, we trace the dynamic response of inflation to total, backward and forward GVC shocks, at the aggregate level and across core, peripheral and CEEC economies. GVC integra- tion is, on average, disinflationary, supporting the discipline-on-prices hypothesis. The aggregate result, however, masks substantial heterogeneity: backward sourcing dampens prices in core and CEEC countries, forward linkages generate demand-pull in core suppliers and competitive discipline in CEECs, while peripheral economies behave as price-takers. Results are robust to first-differencing.

Suggested Citation

  • Mariam Camarero & Antonia López-Villavicencio & Cecilio Tamarit, 2026. "GVC participation and inflation in the European Union," Working Papers 2609, Department of Applied Economics II, Universidad de Valencia.
    • Handle: RePEc:eec:wpaper:2609
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    References listed on IDEAS

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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