Christoph Grosse Steffen
@GrosseSteffen
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Economist @banquedefrance| own views | PhD @FU_Berlin | former @diw_berlin
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Joined January 2018
@cepr_org @CREIResearch @UPFBarcelona @bse_barcelona @GrosseSteffen @banquedefrance Here is a thread summarizing the paper
New paper on Fragmented Monetary Unions. We provide a theory to understand why fragmentation risk threatens price stability in the euro area, some monetary interventions by the ECB (OMT, PEPP, TPI), and why the ECB is not your usual central bank. https://t.co/Ehg3Ih10iO
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We compare our methodological approach with a damage function calibrated to meteorological data and find that the attenuation problem is better addressed in our dataset by an IV-setting. Working paper 👉 https://t.co/ShaotLRqz0
banque-france.fr
Working Paper Series no. 935. This paper provides a novel instrumental variable approach for the estimation of dynamic causal effects of weather-related disasters on consumer prices. We compute...
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These effects are all relatively small compared with average inflation dispersion and volatility. Further, these effects are transitory and fade out after 4 months.
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Aggregate inflation per income quintiles shows that the inflationary effect for the lowest income quintile (0.6pp) is higher compared with the highest income quintile (0.4pp), mainly due to the higher share of fresh food items in consumption baskets of lower income households.
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(3) Weather-related disasters raise inflation inequality. Not all households consume the same goods. Poor households experience higher inflation due to higher share of fresh food items.
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The full CPI decomposition in response to weather-related disasters shows offsetting effects between fresh food (⬆️⬆️ supply-driven) and manufactured products (↘️) and services inflation (↘️), the latter demand driven.
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(2) We provide the full decomposition of CPI inflation. Aggregation hides strong sectoral effects: A strong rise in fresh food products (11pp) is dampened by decline in manufactured products and services (-0.2pp).
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(1) Disasters have a mild positive (0.5pp), and transitory effect on inflation.
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We use harmonized inflation data for 4 French overseas territories (La Réunion, Guadeloupe, Martinique and Guyane), 1991m1-2018m12. We find that:
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We propose LP-IV approach for unbiased inference about the inflationary effect of weather-related disasters. The instrument is needed to solve a reporting bias in administrative disaster databases and tackle simultaneously an attenuation bias in meteorological data.
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What are the effects of weather-related disasters on inflation? Central banks preparing for climate change and monitoring disinflation need to understand better the effects, magnitudes and dynamics. Unfortunately also this summer.
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Today, I am presenting the paper "Decomposing the Inflation Response to Weather Related Disasters", joint work with @ErwanGautier17, @magali_marx and Paul Vertier, at #EAERE2024 in beautiful #Leuven. A thread 🧵
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We compare our methodological approach with a damage function calibrated to meteorological data and find that the attenuation problem is better addressed in our dataset by an IV-setting. Read the full working paper 👉 https://t.co/ShaotLRqz0
banque-france.fr
Working Paper Series no. 935. This paper provides a novel instrumental variable approach for the estimation of dynamic causal effects of weather-related disasters on consumer prices. We compute...
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(4) These effects are all relatively small compared with average inflation dispersion and volatility. Further, these effects are transitory and fade out after 4 months.
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(3) Weather-related disasters raise inflation inequality. Not all households consume the same goods. Poor households experience higher inflation due to higher share of fresh food items.
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(2) We provide the full decomposition of CPI inflation. Aggregation hides strong sectoral effects: A strong rise in fresh food products (11pp) is dampened by decline in manufactured products and services (-0.2pp).
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We find that (1) Disasters have a mild positive (0.5pp), and transitory effect on aggregate inflation.
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