Globalization, Pass-Through and Inflation Dynamic

Pierpaolo Benigno and Ester Faia

No 10-E-17, IMES Discussion Paper Series from Institute for Monetary and Economic Studies, Bank of Japan

Abstract: An important aspect of the globalization process is the increase in interdependence among countries through the deepening of trade linkages. This process should increase competition in each destination market and change the pricing behavior of firms. We present an extension of Dornbusch (1987)'s model to analyze the extent to which globalization, interpreted as an increase in the number of foreign products in each destination market, modifies the slope and the position of the New-Keynesian aggregate-supply equation and, at the same time, affects the degree of exchange rate pass-through. We provide empirical evidence that supports the results of our model.

Keywords: AS equations; Oligopolistic Competition; Inflation Dynamic (search for similar items in EconPapers)
JEL-codes: E31 F41 (search for similar items in EconPapers)
Date: 2010-07
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-opm
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Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Globalization, Pass-Through, and Inflation Dynamics (2016)
Working Paper: Globalization, Pass-Through and Inflation Dynamic (2010)
Working Paper: Globalization, pass-through and inflation dynamic (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ime:imedps:10-e-17

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