Global slack and domestic inflation rates: a structural investigation for G-7 countries
Fabio Milani ()
No 33, Globalization Institute Working Papers from Federal Reserve Bank of Dallas
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.
JEL-codes: E31 E50 E52 E58 F41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-opm
Note: Published as: Milani, Fabio (2015), "Global Slack and Domestic Inflation Rates: A Structural Investigation for G-7 Countries," Journal of Macroeconomics 32 (4): 968-981.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
Journal Article: Global slack and domestic inflation rates: A structural investigation for G-7 countries (2010)
Working Paper: Global Slack and Domestic Inflation Rates: A Structural Investigation for G-7 Countries (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:fip:feddgw:33
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in Globalization Institute Working Papers from Federal Reserve Bank of Dallas Contact information at EDIRC.
Bibliographic data for series maintained by Amy Chapman ().