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The Open Economy Phillips Curve: 'New Keynesian' Theory and Evidence

Author

Listed:
  • Razin, Assaf
  • Yuen, Chi-Wa
  • Loungani, Prakash

Abstract

The Paper derives an open economy New-Keynesian Phillips curve. The Phillips curve depends on growth in the domestic economy excess capacity, differential growth between foreign output and domestic output, and on the surprise depreciation of the real exchange rate. The Paper provides new evidence on the effect of globalization of the economy, in both the trade and capital transactions, in the Phillips curve. The evidence is consistent with the predictions of the theory.

Suggested Citation

  • Razin, Assaf & Yuen, Chi-Wa & Loungani, Prakash, 2002. "The Open Economy Phillips Curve: 'New Keynesian' Theory and Evidence," CEPR Discussion Papers 3582, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3582
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    Citations

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    Cited by:

    1. André Marine Charlotte & Traficante Guido, 2021. "Forward Guidance in an Advanced Small Open Economy in the Effective Lower Bound," Working Papers 2021-16, Banco de México.
    2. Konstantin Styrin & Oleg Zamulin, 2012. "A Real Exchange Rate Based Phillips Curve," Working Papers w0179, New Economic School (NES).
    3. André, Marine-Charlotte & Traficante, Guido, 2020. "Forward Guidance in Small Open Economy," MPRA Paper 104600, University Library of Munich, Germany.

    More about this item

    Keywords

    Sacrifice ratios; Phillips curve; New keynesian phillips curve; Strategic interactions among price setters; Imperfect competition in the product market;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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