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

15 Pages Posted: 17 Dec 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

Date Written: November 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 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 Classification: E12, F41

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: https://ssrn.com/abstract=294240

Assaf Razin (Contact Author)

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

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National Bureau of Economic Research (NBER) ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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Centre for Economic Policy Research (CEPR)

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Chi-Wa Yuen

The University of Hong Kong - School of Economics and Finance ( email )

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23 Belcher's Street
Kennedy Town
Hong Kong
+8 52 2859 1051 (Phone)
+8 52 7548 1152 (Fax)

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