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Global slack as a determinant of US inflation

In: Globalisation and inflation dynamics in Asia and the Pacific

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  • Enrique Martinez-Garcia

    (Federal Reserve Bank of Dallas)

  • Mark A Wynne

    (Federal Reserve Bank of Dallas)

Abstract

Resource utilization, or \\"slack,\\" is widely held to be an important determinant of inflation dynamics. As the world has become more globalized in recent decades, some have argued that the concept of slack that is relevant is global rather than domestic (the \\"global slack hypothesis\\"). This line of argument is consistent with standard New Keynesian theory. However, the empirical evidence is fragile, at best, possibly because of a disconnect between empirical and theory-consistent measures of output gaps.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Enrique Martinez-Garcia & Mark A Wynne, 2013. "Global slack as a determinant of US inflation," BIS Papers chapters, in: Bank for International Settlements (ed.), Globalisation and inflation dynamics in Asia and the Pacific, volume 70, pages 93-98, Bank for International Settlements.
  • Handle: RePEc:bis:bisbpc:70-10
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    References listed on IDEAS

    as
    1. John M. Roberts, 2006. "Monetary Policy and Inflation Dynamics," International Journal of Central Banking, International Journal of Central Banking, vol. 2(3), September.
    2. Geoffrey M. B. Tootell, 1998. "Globalization and U.S. inflation," New England Economic Review, Federal Reserve Bank of Boston, issue Jul, pages 21-33.
    3. Clarida, Richard & Gali, Jordi & Gertler, Mark, 2002. "A simple framework for international monetary policy analysis," Journal of Monetary Economics, Elsevier, vol. 49(5), pages 879-904, July.
    4. Mark A. Wynne, 2005. "Globalization and monetary policy," Southwest Economy, Federal Reserve Bank of Dallas, issue Jul, pages 1-8.
    5. Gamber, Edward N & Hung, Juann H, 2001. "Has the Rise in Globalization Reduced U.S. Inflation in the 1990s?," Economic Inquiry, Western Economic Association International, vol. 39(1), pages 58-73, January.
    6. James A. Orr, 1994. "Has excess capacity abroad reduced U.S. inflationary pressures?," Quarterly Review, Federal Reserve Bank of New York, vol. 19(Sum), pages 101-106.
    7. Enrique Martinez-Garcia & Mark A. Wynne, 2010. "The global slack hypothesis," Staff Papers, Federal Reserve Bank of Dallas, issue Sep.
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    Cited by:

    1. Milani, Fabio & Park, Sung Ho, 2015. "The effects of globalization on macroeconomic dynamics in a trade-dependent economy: The case of Korea," Economic Modelling, Elsevier, vol. 48(C), pages 292-305.
    2. Kamber, Güneş & Wong, Benjamin, 2020. "Global factors and trend inflation," Journal of International Economics, Elsevier, vol. 122(C).
    3. Raphael A. Auer & Claudio Borio & Andrew Filardo, 2017. "The Globalisation of Inflation: The Growing Importance of Global Value Chains," CESifo Working Paper Series 6387, CESifo.
    4. Carsten A. Holz & Aaron Mehrotra, 2016. "Wage and Price Dynamics in China," The World Economy, Wiley Blackwell, vol. 39(8), pages 1109-1127, August.
    5. Carsten A Holz & Aaron Mehrotra, 2013. "Wage and price dynamics in a large emerging economy: The case of China," BIS Working Papers 409, Bank for International Settlements.
    6. Chen, Changsheng & Girardin, Eric & Mehrotra, Aaron, 2017. "Global slack and open economy Phillips curves – A province-level view from China," China Economic Review, Elsevier, vol. 42(C), pages 74-87.

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