At the end of the period shown, domestic demand has nearly returned to baseline, while net exports are just a bit below baseline--consistent with Home country’s GDP remaining at baseline (panel E).
First, the commodity boom underscores the importance of well-anchored inflation expectations. People's expectations for future inflation do influence actual future inflation rates. Thus, there is a risk that the high visibility of energy prices could lead to increased inflation expectations and to more general inflationary pressures.