DP16526 Commodity Prices and Global Inflation, 1851-1913

Author(s): Stefan Gerlach, Rebecca Stuart
Publication Date: September 2021
Date Revised: September 2021
Keyword(s): commodity prices, Global inflation, gold standard, pig iron
JEL(s): E31, F40, N10
Programme Areas: Economic History, Monetary Economics and Fluctuations
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16526

This paper uses annual data to study the interaction of consumer and commodity prices in 15 economies over the period 1850-1913. We find that consumer price inflation in all 15 countries co-moves with a broad measure of changes in commodity prices. Consumer prices comove most strongly with changes in metal prices, in particular pig iron prices. Furthermore, changes in pig iron prices and production, which have attracted much attention in the literature on 19th century US business cycles, co-move with the international business cycle, suggesting that pig iron prices offer a transmission channel through which international business cycle movements affect inflation.