Globalisation and Inflation

9 Pages Posted: 13 Dec 2006

See all articles by Charles Richard Bean

Charles Richard Bean

London School of Economics & Political Science (LSE) - Department of Economics; Bank of England

Abstract

In this speech, Charlie Bean, Executive Director, Chief Economist and member of the Monetary Policy Committee, discusses the impact of globalisation on the industrialised countries and in particular the inflation process. He explains how globalisation has affected the returns to labour and capital, and the location of production in the world economy. Globalisation has also influenced relative prices, lowering the prices of imported goods but boosting the prices of oil and other commodities. And it may have changed the inflationary process, flattening the trade-off between domestic activity and inflation through a number of channels. Although globalisation has provided a benign backdrop for monetary policy, it poses a number of challenges going forward: the beneficial tailwind has waned and changes in product and labour markets have altered the determination of prices and wages in ways central bankers do not yet fully understand.

Suggested Citation

Bean, Charles Richard, Globalisation and Inflation. Bank of England Quarterly Bulletin, Winter 2006. Available at SSRN: https://ssrn.com/abstract=950977

Charles Richard Bean (Contact Author)

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
R423A
London WC2A 2AE
United Kingdom
+44 0171-955-7291 (Phone)
+44 0171-955-7595 (Fax)

Bank of England ( email )

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London, EC2R 8AH
United Kingdom

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