Abstract

http://ssrn.com/abstract= 1923686
 
 

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Trade Integration and the Phillips Curve


Gregory Gadzinski


International University of Monaco (IUM)

Mathias Hoffmann


University of Cologne - Department of Economics

February 19, 2008


Abstract:     
This paper analyses the interconnectedness between the slope of the Phillips Curve and the degree of trade openness. A micro founded expectations - augmented Phillips Curve for a small open economy illustrates that the slope of the Phillips Curve is negatively related to the degree of trade integration in an open economy. The model shows that the monetary authority should place a higher weight on stabilising in‡ation than the output gap when the economy becomes more open to trade. Estimating a nonlinear model where the slope is time varying and depends on openness, the paper’s empirical results indicate support for the negative relationship between the degree of trade openness and the slope of the Phillips Curve across the G-7 countries.

Number of Pages in PDF File: 32

Keywords: Output-In‡ation Trade-Off, Openness, Censored model

JEL Classification: C23, F41, G15

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Date posted: September 7, 2011  

Suggested Citation

Gadzinski, Gregory and Hoffmann, Mathias, Trade Integration and the Phillips Curve (February 19, 2008). Available at SSRN: http://ssrn.com/abstract=1923686 or http://dx.doi.org/10.2139/ssrn.1923686

Contact Information

Gregory Gadzinski (Contact Author)
International University of Monaco (IUM) ( email )
2 Av Prince Hereditaire Albert
Stade Louis II/B
Monaco, Monaco MC-98000
United States
Mathias Hoffmann
University of Cologne - Department of Economics ( email )
Cologne, 50923
Germany
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References:  34
Citations:  1

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