Is Globalization Weakening the Inflation–Output Relationship?

15 Pages Posted: 6 Aug 2014

See all articles by Antonia López-Villavicencio

Antonia López-Villavicencio

University of Angers - Centre d'économie de l'Université de Paris Nord (CEPN)

Sophie Saglio

University Paris 8

Multiple version iconThere are 2 versions of this paper

Date Written: September 2014

Abstract

This paper investigates whether trade and financial openness has weakened the inflation-output trade‐off and caused a shift in the preferences of monetary authorities. Based on the backward‐looking Phillips curve and a Taylor‐type interest rate rule, our results for France, the UK and the USA for the 1970-2012 period do not provide support for the relevance of globalization in making inflation less responsive to output expansions. Moreover, the change of preferences of Central Banks towards growth‐oriented objectives is neither due to higher trade nor to financial globalization.

Suggested Citation

López-Villavicencio, Antonia and Saglio, Sophie, Is Globalization Weakening the Inflation–Output Relationship? (September 2014). Review of International Economics, Vol. 22, Issue 4, pp. 744-758, 2014. Available at SSRN: https://ssrn.com/abstract=2476702 or http://dx.doi.org/10.1111/roie.12130

Antonia López-Villavicencio (Contact Author)

University of Angers - Centre d'économie de l'Université de Paris Nord (CEPN) ( email )

UMR7115
Université Paris-Nord
Paris XIII
France

Sophie Saglio

University Paris 8 ( email )

2 rue de la Liberté
Paris, 93526
France

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