Globalization and inflation in Europe
AbstractWhat is the impact of import competition from other low-wage countries (LWCs) on inflationary pressure in Western Europe? This paper seeks to understand whether labor-intensive exports from emerging Europe, Asia, and other global regions have a uniform impact on producer prices in Germany, France, Italy, Sweden, and the United Kingdom. In a panel covering 110 (4-digit) NACE industries from 1995 to 2008, IV estimates predict that LWC import competition is associated with strong price effects. More specifically, when Chinese exporters capture 1 percent of European market share, producer prices decrease about 2 percent. In contrast, no effect is present for import competition from low-wage countries in Central and Eastern Europe.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Federal Reserve Bank of Dallas in its series Globalization and Monetary Policy Institute Working Paper with number 65.
Date of creation: 2010
Date of revision:
Other versions of this item:
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-12-04 (All new papers)
- NEP-CBA-2010-12-04 (Central Banking)
- NEP-EEC-2010-12-04 (European Economics)
- NEP-EUR-2010-12-04 (Microeconomic European Issues)
- NEP-MAC-2010-12-04 (Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nigel Pain & Isabell Koske & Marte Sollie, 2006. "Globalisation and Inflation in the OECD Economies," OECD Economics Department Working Papers 524, OECD Publishing.
- Wheeler, Tracy, 2008. "Has trade with China affected UK inflation?," Discussion Papers 22, Monetary Policy Committee Unit, Bank of England.
- Marc J. Melitz & Gianmarco I. P. Ottaviano, 2008.
"Market Size, Trade, and Productivity,"
Review of Economic Studies,
Oxford University Press, vol. 75(1), pages 295-316.
- Marc J. Melitz & Gianmarco I.P. Ottaviano, 2005. "Market Size, Trade, and Productivity," Development Working Papers 201, Centro Studi Luca d\'Agliano, University of Milano.
- Marc J. Melitz & Gianmarco I.P. Ottaviano, 2005. "Market Size, Trade, and Productivity," NBER Working Papers 11393, National Bureau of Economic Research, Inc.
- Ottaviano, Gianmarco & Melitz, Marc, 2008. "Market Size, Trade, and Productivity," Scholarly Articles 3229096, Harvard University Department of Economics.
- Matteo Bugamelli & Silvia Fabiani & Enrico Sette, 2010. "The pro-competitive effect of imports from China: an analysis of firm-level price data," Temi di discussione (Economic working papers) 737, Bank of Italy, Economic Research and International Relations Area.
- Donald R. Davis & David E. Weinstein, 1998.
"An Account of Global Factor Trade,"
Harvard Institute of Economic Research Working Papers
1849, Harvard - Institute of Economic Research.
- Donald R. Davis & David E. Weinstein, 1998. "An Account of Global Factor Trade," NBER Working Papers 6785, National Bureau of Economic Research, Inc.
- Davis, D.R. & Weinstein, D.E., 1999. "An Account of Global Factor Trade," Working Papers 435, Research Seminar in International Economics, University of Michigan.
- John Romalis, 2004. "Factor Proportions and the Structure of Commodity Trade," American Economic Review, American Economic Association, vol. 94(1), pages 67-97, March.
- Ernst Glatzer & Ernest Gnan & Maria Teresa Valderrama, 2006. "Globalization, Import Prices and Producer Prices in Austria," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 24â43.
- Jane Ihrig & Steven B. Kamin & Deborah Lindner & Jaime Marquez, 2007. "Some simple tests of the globalization and inflation hypothesis," International Finance Discussion Papers 891, Board of Governors of the Federal Reserve System (U.S.).
- Natalie Chen & Jean Imbs & Andrew Scott, 2006.
"The dynamics of trade and competition,"
Working Paper Research
91, National Bank of Belgium.
- Trefler, Daniel, 1993. "International Factor Price Differences: Leontief Was Right!," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 961-87, December.
- Auer, Raphael & Fischer, Andreas M., 2010.
"The effect of low-wage import competition on U.S. inflationary pressure,"
Journal of Monetary Economics,
Elsevier, vol. 57(4), pages 491-503, May.
- Raphael Anton Auer & Andreas M. Fischer, 2008. "The Effect of Low-Wage Import Competition on U.S. Inflationary Pressure," Working Papers 2008-18, Swiss National Bank.
- Geoffrey M.B. Tootell, 1998. "Globalization and U.S. inflation," New England Economic Review, Federal Reserve Bank of Boston, issue Jul, pages 21-33.
- Harchaoui, Tarek M., 2012. "The Europe-U.S. Retail Trade Productivity Gap in a Rear-view Mirror," GGDC Research Memorandum GD-127, Groningen Growth and Development Centre, University of Groningen.
- Chevassus-Lozza, Emmanuelle & Gaigne, Carl & Le Mener, Leo, 2012.
"Does input trade liberalization boost downstream firms’ exports? Theory and firm-level evidence,"
126946, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
- Chevassus-Lozza, Emmanuelle & Gaigné, Carl & Le Mener, Léo, 2013. "Does input trade liberalization boost downstream firms' exports? Theory and firm-level evidence," Journal of International Economics, Elsevier, vol. 90(2), pages 391-402.
- Raphael Anton Auer, 2012.
"Exchange Rate Pass-Through, Domestic Competition, and Inflation: Evidence from the 2005/08 Revaluation of the Renminbi,"
2012-01, Swiss National Bank.
- Raphael Auer, 2011. "Exchange rate pass-through, domestic competition and inflation -- evidence from the 2005/08 revaluation of the Renminbi," Globalization and Monetary Policy Institute Working Paper 68, Federal Reserve Bank of Dallas.
- Raphael A. Auer, 2012. "Exchange Rate Pass-Through, Domestic Competition, and Inflation: Evidence from the 2005/08 Revaluation of the Renminbi," CESifo Working Paper Series 3759, CESifo Group Munich.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Delia Rodriguez).
If references are entirely missing, you can add them using this form.