Globalisation and the Determinants of Domestic Inflation
29 Pages Posted: 16 Apr 2008
Abstract
The remarkable stability of low domestic inflation in many countries requires explanation. In this paper, a number of competing hypotheses are evaluated on a stand-alone basis, and all are found to be inadequate. This includes the view that this outcome has been solely the result of more effective disinflationary monetary policies. However, a combination of these hypotheses (including a significant role for increased global competition) seems to provide a plausible explanation, not only for continuing low inflation, but also its coexistence with rapid growth and low real interest rates. Unfortunately, the analysis also leads to the conclusion that rising inflation, unwinding financial imbalances, or both, could easily follow the welcome stability seen to date.
Keywords: inflation, monetary policy, globalisation, Phillips curve
JEL Classification: E31, E52, E58, F02, F41
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Some Simple Tests of the Globalization and Inflation Hypothesis
By Jane E. Ihrig, Steven B. Kamin, ...
-
By Matteo Ciccarelli and Benoit Mojon
-
The "New Keynesian" Phillips Curve: Closed Economy vs. Open Economy
By Assaf Razin and Chi-wa Yuen
-
The 'New Keynesian' Phillips Curve: Closed Economy vs. Open Economy
By Assaf Razin and Chi-wa Yuen
-
Competition, Globalization, and the Decline of Inflation
By Natalie Chen, Jean M. Imbs, ...
-
Competition, Globalization and the Decline of Inflation
By Natalie Chen, Jean M. Imbs, ...