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Globalization and Inflation: a Swiss Perspective

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  • John A. Tatom

    (Johns Hopkins University)

Abstract

Is inflation caused by global developments instead of domestic monetary factors? This paper explores the role of globalization for inflation, especially in Switzerland, one of the smallest and most open economies where the globalization hypothesis should be most relevant. It provides tests of whether Swiss inflation is causally related to inflation elsewhere. It also examines Swiss inflation in a P* model and whether it is also influenced by inflation abroad or by import prices. It finds that Swiss inflation is made at home. Evidence is presented of a co-integrating relationship of Swiss and German inflation, likely due to common inflation objectives.

Suggested Citation

  • John A. Tatom, 2017. "Globalization and Inflation: a Swiss Perspective," Open Economies Review, Springer, vol. 28(3), pages 523-545, July.
    • Handle: RePEc:kap:openec:v:28:y:2017:i:3:d:10.1007_s11079-016-9428-6
    DOI: 10.1007/s11079-016-9428-6
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    More about this item

    Keywords

    Inflation; Globalization; Switzerland; GDP gap;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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