EconPapers    
Economics at your fingertips  
 

Global slack and domestic inflation rates: A structural investigation for G-7 countries

Fabio Milani ()

Journal of Macroeconomics, 2010, vol. 32, issue 4, 968-981

Abstract: Recent papers have argued that one implication of globalization is that domestic inflation rates may have now become more a function of "global", rather than domestic, economic conditions, as postulated by closed-economy Phillips curves. This paper aims to assess the empirical importance of global output in determining domestic inflation rates by estimating a structural model for a sample of G-7 economies. The model can capture the potential effects of global output fluctuations on both the aggregate supply and the aggregate demand relations in the economy and it is estimated using full-information Bayesian methods. The empirical results reveal a significant effect of global output on aggregate demand in most countries. Through this channel, global economic conditions can indirectly affect inflation. The results, instead, do not seem to provide evidence in favor of altering domestic Phillips curves to include global slack as an additional driving variable for inflation.

Keywords: Globalization; Global; slack; Inflation; dynamics; Phillips; curve; Bayesian; estimation (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0164-0704(10)00027-3
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Global slack and domestic inflation rates: a structural investigation for G-7 countries (2009) Downloads
Working Paper: Global Slack and Domestic Inflation Rates: A Structural Investigation for G-7 Countries (2009) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:32:y:2010:i:4:p:968-981

Access Statistics for this article

Journal of Macroeconomics is currently edited by Douglas McMillin and Theodore Palivos

More articles in Journal of Macroeconomics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2020-03-29
Handle: RePEc:eee:jmacro:v:32:y:2010:i:4:p:968-981