Inflation and Globalisation: A Modelling Perspective
10 Pages Posted: 14 Apr 2013
Date Written: February 1, 2013
Abstract
This paper examines some standard open-economy New Keynesian models to address the question of how globalisation affects the inflation process. Specifically, it investigates how the Phillips curve for consumer price inflation in a country is affected by openness, and how the optimal choice of monetary policy is influenced by openness. The paper compares models that assume producer currency pricing with ones that assume local currency pricing. It also considers the role of financial market completeness.
Full publication: Globalisation and Inflation Dynamics in Asia and the Pacific
Keywords: open-economy Phillips curve, monetary policy, exchange rate policy
JEL Classification: F41, F42, E61
Suggested Citation: Suggested Citation
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