Inflation as an Ecological Phenomenon

The outline of this paper is as follows: section 1 presents evidence on the role of fossil fuels in driving inflation, including in the context of the U. [...] (2022) find that ‘petroleum and coal products’ is the sector in which prices are by far the most ‘systemically significant’.25 This means that these prices are volatile, have major effects on other sectors across the economy, and overall have had the largest impact on inflation both in normal times and in the recent inflationary period. [...] An appreciation of the dollar is also associated with tighter dollar credit conditions, the so-called “financial channel”: as economic agents around the world are indebted in dollars, an appreciating dollar increases the value of the debt in domestic-currency terms and lowers cross-border lending.27 In recent decades, there was a negative correlation between energy prices and the dollar strength:. [...] The non-linear and global nature of climateflation A point of consensus in the literature is that the impact of extreme weather events on prices rises disproportionately with the severity of the events.55 For example, Faccia et al. [...] Furthermore, the transmission of interest rates to the rest of the economy is slow,88 implying that by the time they have had the desired impact on demand, the exogenous shock may be long over.