The perception that Asia's inflation dynamics is driven by idiosyncratic supply shocks implies, as a corollary, that there is little scope for a policy reaction to a build-up of inflationary pressures. However, Asia's fast growth and integration over the last two decades suggest that the drivers of inflation may have changed, and that domestic demand pressures may now play a larger role than in the past. This paper presents a quantitative analysis of inflation dynamics in Asia using a Global VAR (GVAR) model, which explicitly incorporates the role of regional and global spillovers in driving Asia's inflation. Our results suggest that over the past two decades the main drivers of inflation in Asia have been monetary and supply shocks, but also that, in recent years, the contribution of these shocks has fallen, whereas demand-side pressures have started to emerge as an important contributor to inflation in Asia.

The research papers presented at the conference covered the dynamics of inflation forecasts in the region; the measurement of economic slack; supply chains and inflation spillovers; financial globalisation and the role of exchange rate in monetary policy; global commodity price cycles and their monetary policy implications; and the role of inflation in China's monetary policy rule. This volume is a collection of the speeches, presentations and a background paper from the conference."--Abstract.

We examine the relationship between money supply growth and inflation in 3 Asian Economies which are India, Malaysia and Japan using a time-frequency approach. The application of a unified multi-scale analysis allows us to provide a continuous assessment of the link between money supply growth and inflation, unlike most of the existing literature studying this relationship. We also employ a bivariate frequency-domain causality test to determine the nature and direction of interdependence between money supply growth and inflation dynamics. Our findings provide a better understanding of their lead-lag linkages and causal relationship in the selected countries of the Asia-Pacific region.

Bangko Sentral ng Pilipinas and the Bank for International Settlements (BIS) co-hosted a conference on "Inflation dynamics in Asia and the Pacific" on 19-20 August 2019 in Manila, the Philippines. The conference marked the completion of the BIS Asian Office's two-year research programme on "Central bank policy under changing inflation dynamics: challenges for Asia-Pacific" that had been endorsed by the Asian Consultative Council central bank Governors in November 2017.The conference brought together senior officials and researchers from central banks and academics. This volume is a collection of the speeches, papers and prepared discussant remarks from the conference. Papers presented at the conference covered the drivers of inflation in advanced and emerging market economies; the implications of robots for labour and inflation; the pass-through from short-horizon to long-horizon inflation expectations; an ageing workforce and inflation; strategic complementarity and asymmetric price setting among firms; and the impact of relative price changes and asymmetric adjustments on aggregate inflation.Contributed Papers:"https://ssrn.com/abstract=3575893" What Drives Inflation in Advanced and Emerging Market Economies?"https://ssrn.com/abstract=3575925" Comments on “What Drives Inflation in Advanced and Emerging Market Economies?”"https://ssrn.com/abstract=3576007" Robots and Labour: Implications for Inflation Dynamics"https://ssrn.com/abstract=3576015" Comments on “Robots and Labour: Implications for Inflation Dynamics”"https://ssrn.com/abstract=3576018" The Pass-Through from Short-Horizon to Longhorizon Inflation Expectations"https://ssrn.com/abstract=3576022" Comments on “The Pass-Through from Shorthorizon to Long-Horizon Inflation Expectations”"https://ssrn.com/abstract=3576027" Can an Ageing Workforce Explain Low Inflation?"https://ssrn.com/abstract=3576038" Comments on “Can an Ageing Workforce Explain Low Inflation?”"https://ssrn.com/abstract=3576049" Strategic Complementarity and Asymmetric Price Setting Among Firms"https://ssrn.com/abstract=3576060" Comments on “Strategic Complementarity and Asymmetric Price Setting Among Firms”"https://ssrn.com/abstract=3576071" Impact of Relative Price Changes and Asymmetric Adjustments on Aggregate Inflation: Evidence from the Philippines"https://ssrn.com/abstract=3576080" Comments on “Impact of Relative Price Changes and Asymmetric Adjustments on Aggregate Inflation: Evidence from the Philippines”