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Is globalization weakening the inflation–output relationship?

Author

Listed:
  • Antonia Lopez Villavicencio

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Sophie Saglio

    (LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8 Vincennes-Saint-Denis)

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 Phillips curve and a Taylor-type interest rate rule, our results for France, 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 Central Banks towards growth-oriented objectives is neither due to higher trade nor to financial globalization.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Antonia Lopez Villavicencio & Sophie Saglio, 2014. "Is globalization weakening the inflation–output relationship?," Post-Print hal-02874745, HAL.
    • Handle: RePEc:hal:journl:hal-02874745
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    2. Ahmad, Saad & Civelli, Andrea, 2016. "Globalization and inflation: A threshold investigation," Journal of Macroeconomics, Elsevier, vol. 48(C), pages 283-304.
    3. Christian Dreger & Malte Rieth & David Pothier, 2015. "Is Globalization Reducing the Ability of Central Banks to Control Inflation? In-Depth Analysis," DIW Berlin: Politikberatung kompakt, DIW Berlin, German Institute for Economic Research, volume 106, number pbk106, January.
    4. Malte Rieth, 2015. "Can Central Banks Successfully Lean against Global Headwinds?," DIW Roundup: Politik im Fokus 88, DIW Berlin, German Institute for Economic Research.
    5. Muhammad Shafiullah & Luke Emeka Okafor & Usman Khalid, 2019. "Determinants of international tourism demand: Evidence from Australian states and territories," Tourism Economics, , vol. 25(2), pages 274-296, March.

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