Working Paper: NBER ID: w12687
Authors: Laurence M. Ball
Abstract: Many observers suggest that the "globalization" of the U.S. economy has changed the behavior of inflation. This essay examines this idea, focusing on several questions: (1) Has globalization reduced the long-run level of inflation? (2) Has it affected the structure of inflation dynamics, as captured by the Phillips curve? (3) Has it contributed substantial negative shocks to the inflation process? The answers to these questions are no, no, and no.
Keywords: Globalization; Inflation; Phillips Curve
JEL Codes: E31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Globalization (F60) | Long-run level of inflation (E31) |
| Globalization (F60) | Structure of inflation dynamics (Phillips curve) (E31) |
| Globalization (F60) | Negative shocks to inflation process (E31) |
| Domestic output gaps (E23) | Inflation (E31) |
| Foreign output gaps (F41) | Inflation (E31) |