The impact of the triangular US dollar, oil, and gold model on global inflation

ABSTRACT

This article aims to re-examine the double effect of the US dollar, gold, and oil regime on global inflation by the OLS method through 275 samples of 25 countries from 2010 to 2020. We find that the depreciation of the US dollar increases the commodity prices through the oil-dollars path, leading to global inflation. However, the dollar appreciation also makes a relative depreciation of other currencies through the gold-dollar way, and its substitution effect on currencies cuts their prices, which drives up inflation rates. Therefore, the gold prices would rise instead of fall after the US dollar from interest rate hikes and cause the easing monetary policies of other countries to be ineffective.

KEYWORDS:

• Interest rate
• gold
• oil
• the US dollar
• inflation

JEL CLASSIFICATION:

• E31
• F33
• G18

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the Planning Project of Philosophy and Social Sciences in Anhui Province (AHSKQ2022D080).