Global Slack as a Determinant of U.S. Inflation

Posted: 14 Jul 2021

See all articles by Enrique Martínez-García

Enrique Martínez-García

Federal Reserve Bank of Dallas - Research Department

Mark A. Wynne

Federal Reserve Bank of Dallas

Multiple version iconThere are 2 versions of this paper

Date Written: 2012

Abstract

Resource utilization, or \\"slack,\\" is widely held to be an important determinant of inflation dynamics. As the world has become more globalized in recent decades, some have argued that the concept of slack that is relevant is global rather than domestic (the \\"global slack hypothesis\\"). This line of argument is consistent with standard New Keynesian theory. However, the empirical evidence is fragile, at best, possibly because of a disconnect between empirical and theory-consistent measures of output gaps.

Suggested Citation

Martinez-Garcia, Enrique and Wynne, Mark A., Global Slack as a Determinant of U.S. Inflation (2012). Globalization and Monetary Policy Institute Working Paper No. 123, Available at SSRN: https://ssrn.com/abstract=3885377

Enrique Martinez-Garcia (Contact Author)

Federal Reserve Bank of Dallas - Research Department ( email )

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Mark A. Wynne

Federal Reserve Bank of Dallas ( email )

PO Box 655906
Dallas, TX 75265-5906
United States
214-922-5159 (Phone)
214-922-5194 (Fax)

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