The (Dis-)equalizing effects of production networks

We suggest and empirically substantiate that the global production network constitutes an important variable for inflation inequality, as it modulates the impact of cost-push shocks on households. For most price shocks, the production network reduces inflation inequality, however, at the expense of lower-income households. Introducing a synthetic Consumer Price Index indicates lower-income households to be at the losing end of the overall effect of supply-side price shocks.