Globalization and the Output-inflation Tradeoff: New Time Series Evidence

Sylvester Eijffinger and Zongxin Qian

No 7718, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Recent cross-country studies on the globalization and output-inflation tradeoff correlation find openness has no significant effect on OECD countries. Those studies assume parameter constancy across countries. In this paper, we argue that this assumption does not hold for major industrialized countries. Using individual time series analysis, we find the effect of openness on the output-inflation trade off differ in sign and size across countries. In contrast to previous cross-country studies, we find globalization has significantly changed some major industrialized countries? output inflation tradeoff. This has important implications for future theoretical and empirical research.

Keywords: Openness; Output-inflation tradeoff; Phillips curve; Time inconsistency theory (search for similar items in EconPapers)
JEL-codes: E31 E58 F10 F30 F41 (search for similar items in EconPapers)
Date: 2010-02
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Citations: View citations in EconPapers (4)

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Working Paper: Globalization and the Output-Inflation Tradeoff: New Time Series Evidence (2010)
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