{"id":1256,"date":"2023-02-13T16:19:16","date_gmt":"2023-02-13T16:19:16","guid":{"rendered":"https:\/\/www.fiw.ac.at\/publications\/globalizationthe-output-inflation-tradeoff-and-inflation\/"},"modified":"2023-02-13T16:19:16","modified_gmt":"2023-02-13T16:19:16","slug":"globalizationthe-output-inflation-tradeoff-and-inflation","status":"publish","type":"publication","link":"https:\/\/www.fiw.ac.at\/en\/publications\/globalizationthe-output-inflation-tradeoff-and-inflation\/","title":{"rendered":"Globalization,the Output-Inflation Tradeoff, and Inflation"},"content":{"rendered":"\nThis paper provides a comprehensive assessment of the relation between inflation and globalization, measured in terms of trade and financial openness. Using a large crosssection of 91 countries covering the period 1985-2004, we establish two main empirical regularities. Both higher trade and financial openness i) reduce central bank\u2019s inflation bias,yielding lower average inflation, and ii) are associated with a larger output-inflation tradeoff. This evidence is at odds with the standard Barro-Gordon framework, which would require globalization to have a negative effect on the output-inflation tradeoff to yield lower equilibrium inflation, but it is consistent with a recent strand of new Keynesian models emphasizing the role of imperfect competition and wage rigidities. Moreover, our findings do not hold up for the OECD subsample, which suggests that a group of highly developed countries has been successful in creating an institutional framework for central banks that eliminates distortions due to the time inconsistency problem.\n\n","protected":false},"featured_media":0,"menu_order":0,"template":"","jelcode":[448,60,449,87],"keyword":[451,450,452,260],"class_list":["post-1256","publication","type-publication","status-publish","hentry","jelcode-e58","jelcode-f10","jelcode-f30","jelcode-f41","keyword-financial-openness","keyword-globlization","keyword-inflation","keyword-trade"],"acf":{"year":2008,"month":1,"day":"","volume":"","number":"010","pages":46,"reviewed":"0","citeid":"FIW_WP_010","fiwseries":"FIW Working Papers","event":null},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Globalization,the Output-Inflation Tradeoff, and Inflation - FIW<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.fiw.ac.at\/en\/publications\/globalizationthe-output-inflation-tradeoff-and-inflation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Globalization,the Output-Inflation Tradeoff, and Inflation - FIW\" \/>\n<meta property=\"og:description\" content=\"This paper provides a comprehensive assessment of the relation between inflation and globalization, measured in terms of trade and financial openness. Using a large crosssection of 91 countries covering the period 1985-2004, we establish two main empirical regularities. 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