Globalization and the Output-Inflation Tradeoff: New Time Series Evidence

Globalization , the Output - Inflation Tradeoff , and Inflation

FIW – Working Paper Globalization , the Output - Inflation Tradeoff , and Inflation Harald Badinger

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. Both higher trade and financial openness i) reduce central bank’s inflation bias,yielding lower average inflation, and ii) are...

New Evidence on the Output Cost of Fighting Inflation

T he Federal Reserve has made significant progress toward price stability over the last two decades. The annual inflation rate has declined from 13 percent in the early 1980s to roughly 2 percent today. The current environment of low and stable inflation has fostered superior economic performance. Lower inflation has led to lower interest rates, which in turn have helped spur investment, foster...

Some International Evidence on Output-Inflation Tradeoffs

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Experimental Evidence on the Persistence of Output and Inflation

This paper presents experimental evidence from a monetary sticky price economy in which output and inflation depend on expectations of future inflation. In the unique stationary rational expectations equilibrium (REE) nominal demand shocks cause output and inflation to be white noise. In the experimental sessions, however, output and inflation display strong persistence and regular cyclical pat...