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The 'New Keynesian' Phillips Curve: Closed Economy versus Open Economy

Assaf Razin
Tel Aviv University - Eitan Berglas School of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Centre for Economic Policy Research (CEPR)

Chi-Wa Yuen
University of Hong Kong - School of Economics and Finance

November 2001

CEPR Discussion Paper No. 3083

Abstract:     
The Paper extends Woodford's (2000) analysis of the closed economy Phillips curve to an open economy with both commodity trade and capital mobility. We show that consumption smoothing, which comes with the opening of the capital market, raises the degree of strategic complementarity among monopolistic competitive suppliers, thus rendering prices more sticky and magnifying output responses to nominal GDP shocks.

Keywords: Phillips curve, new Keynesian, trade, capital mobility

JEL Classifications: E12, F41

Working Paper Series

Date posted: December 17, 2001 ; Last revised: December 18, 2001

Suggested Citation

Razin, Assaf and Yuen, Chi-Wa, The 'New Keynesian' Phillips Curve: Closed Economy versus Open Economy (November 2001). CEPR Discussion Paper No. 3083. Available at SSRN: http://ssrn.com/abstract=294240


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Contact Information

Assaf Razin (Contact Author)
Tel Aviv University - Eitan Berglas School of Economics ( email )
P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978 Israel
+972 3 640 7303 (Phone)
+972 3 640 9908 (Fax)
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Poschinger Str. 5
DE-81679 Munich Germany
HOME PAGE: http://www.CESifo.de
Centre for Economic Policy Research (CEPR)
90-98 Goswell Road
London EC1V 7RR United Kingdom
Chi-Wa Yuen
University of Hong Kong - School of Economics and Finance ( email )
8th Floor Kennedy Town Centre
23 Belcher's Street
Kennedy Town Hong Kong
+8 52 2859 1051 (Phone)
+8 52 7548 1152 (Fax)
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