Trade Integration and the Phillips Curve

The Global Dimension of Inflation - Evidence from Factor-Augmented Phillips Curves

“…Borio and Filardo (2006), Ihrig et al (2007), Pain et al (2006), Mody and Ohnsorge (2007), Gerlach et al (2008), Ball (2006), IMF (2006), Calza (2008, Gamber and Hung (2001), Tootell (1998) apply traditional Phillips curve frameworks to panels of developed countries or individual developed countries. Batini et al (2005), Balakrishnan and Lopez-Salido (2002), Galí and Lopez-Salido (2002), Razin and Yuen (2002), Gadzinski andHoffmann (2008), Calza (2008), Dées et al (2008), Leith and Malley (2007) and Rumler (2007) all employ New Keynesian setups. Borio and Filardo (2006) find positive and significant effects of foreign output gaps on domestic inflation between 1985 and 2005 in almost all 15 industrial countries they consider (an exception being Germany) and the euro area.…”

“…Based on Phillips curve setups, some papers also analyze whether the parameters, for instance the sensitivity of inflation to fluctuations in the domestic and foreign output gaps (cf. IMF, 2006, Gadzinski and Hoffmann 2008, Ihrig et al 2007, Ball 2006 or in import price inflation (cf. Ihrig et al 2007, IMF 2006 have changed over time and whether globalization is responsible for these changes, with inconclusive results as we will discuss below.…”

The Global Dimension of Inflation - Evidence from Factor-Augmented Phillips Curves

“…Borio and Filardo (2006), Ihrig et al (2007), Pain et al (2006), Mody and Ohnsorge (2007), Gerlach et al (2008), Ball (2006), IMF (2006), Calza (2008), Gamber and Hung (2001), Tootell (1998) apply traditional Phillips curve frameworks to panels of developed countries or individual developed countries. Batini et al (2005), Balakrishnan and Lopez-Salido (2002), Galí and Lopez-Salido (2002), Razin and Yuen (2002), Gadzinski and Hoffmann (2008), Calza (2008), Dées et al (2008), Leith and Malley (2007) and Rumler (2007) all employ New Keynesian setups. Borio and Filardo (2006) find positive and significant effects of foreign output gaps on domestic inflation between 1985 and 2005 in almost all 15 industrial countries they consider (an exception being Germany) and the euro area.…”

“…Based on Phillips curve setups, some papers also analyze whether the parameters, for instance the sensitivity of inflation to fluctuations in the domestic and foreign output gaps (cf. IMF, 2006, Gadzinski and Hoffmann 2008, Ihrig et al 2007, Ball 2006 or in import price inflation (cf. Ihrig et al 2007, IMF 2006 have changed over time and whether globalization is responsible for these changes, with inconclusive results as we will discuss below.…”

The Global Dimension of Inflation – Evidence from Factor‐Augmented Phillips Curves*

“…2 2 Balakrishnan and López‐Salido (2002), Galí and López‐Salido (2001), Razin and Yuen (2002), Batini, Jackson and Nickell (2005), Leith and Malley (2007), Rumler (2007), Gadzinski and Hoffmann (2008), Calza (2009) and Dées et al (2009). …”