What Is the Impact of Global Value Chain Participation on Inflation?

This paper investigates the impact of participation in global value chains (GVCs) on inflation for a sample of 29 OECD economies from 2000 to 2018. Overall, our empirical analysis finds that participation in GVCs increases inflation, which is driven by forward participation, whereas backward participation was insignificant. For middle-income countries, we find a significant positive relationship for forward participation, with backward participation having no effect. In contrast, forward participation for high-income economies is insignificant, while we observe a significant negative relationship between inflation and backward participation