Inflation-Output Tradeoff as Equilibrium Outcome of Globalization / Alon Binyamini, Assaf Razin.

Format:

Book

Author/Creator:

Binyamini, Alon.

Contributor:

National Bureau of Economic Research.

Razin, Assaf.

Series:

Working Paper Series (National Bureau of Economic Research) no. w14379.

NBER working paper series no. w14379

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2008.

Summary:

The paper provides an integrated analysis of globalization effects on the inflation-output tradeoff and monetary policy in the New-Keynesian framework. The prediction of the analysis is threefold. First, labor, goods, and capital mobility flatten the Phillips curve, the tradeoff between inflation and activity. Second, the same globalization forces lead the welfare-based monetary policy to be more aggressive with regard to inflation fluctuations, and at the same time, more benign with respect to the output-gap fluctuations. Third, the equilibrium response of inflation to supply and demand shocks is more moderate, and the response of the output gap to these shocks is more pronounced, when the economy opens up; under such welfare-based monetary policy.

Notes:

Print version record

October 2008.