The 'New Keynesian' Phillips Curve: Closed Economy vs. Open Economy

13 Pages Posted: 11 Oct 2001

See all articles by Assaf Razin

Assaf Razin

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

Chi-Wa Yuen

The University of Hong Kong - School of Economics and Finance

Multiple version iconThere are 2 versions of this paper

Date Written: September 28, 2001

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 monopolistically competitive suppliers, thus rendering prices more sticky and magnifying output responses to nominal GDP shocks.

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

JEL Classification: E12, F41

Suggested Citation

Razin, Assaf and Yuen, Chi-Wa, The 'New Keynesian' Phillips Curve: Closed Economy vs. Open Economy (September 28, 2001). Available at SSRN: https://ssrn.com/abstract=286662 or http://dx.doi.org/10.2139/ssrn.286662

Assaf Razin

Tel Aviv University - Eitan Berglas School of Economics ( email )

P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978
Israel
+972 3 640 7303 (Phone)
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National Bureau of Economic Research (NBER) ( email )

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United States

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Centre for Economic Policy Research (CEPR)

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United Kingdom

Chi-Wa Yuen (Contact Author)

The 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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