Has Globalization Changed Inflation?
21 Pages Posted: 20 Nov 2006 Last revised: 2 Sep 2010
Date Written: November 2006
Many observers suggest that the "globalization" of the U.S. economy has changed the behavior of inflation. This essay examines this idea, focusing on several questions: (1) Has globalization reduced the long-run level of inflation? (2) Has it affected the structure of inflation dynamics, as captured by the Phillips curve? (3) Has it contributed substantial negative shocks to the inflation process? The answers to these questions are no, no, and no.
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