Is Globalization Weakening the Inflation–Output Relationship?

Antonia López-Villavicencio () and Sophie Saglio ()
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Antonia López-Villavicencio: UAB - Universitat Autònoma de Barcelona = Autonomous University of Barcelona = Universidad Autónoma de Barcelona

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Abstract: Abstract This paper investigates whether trade and financial openness has weakened the inflation–output trade‐off and caused a shift in the preferences of monetary authorities. Based on the backward‐looking P hillips curve and a T aylor‐type interest rate rule, our results for F rance, the UK and the USA for the 1970–2012 period do not provide support for the relevance of globalization in making inflation less responsive to output expansions. Moreover, the change of preferences of C entral B anks towards growth‐oriented objectives is neither due to higher trade nor to financial globalization.

Keywords: inflation; Taylor rule; state-space model; globalization; Phillips curve; Phillips curve globalization state-space model Taylor rule inflation (search for similar items in EconPapers)
Date: 2014-04-03
Note: View the original document on HAL open archive server: https://hal.science/hal-05455785v1
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Published in Review of International Economics, 2014, 22 (4), pp.744-758. ⟨10.1111/roie.12130⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05455785

DOI: 10.1111/roie.12130

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