We study the effects of globalisation on slope New Keynesian Phillips curve for CPI inflation, based a panel 35 countries. find that output gap generally has significant positive effect but this decreases as integration in global economy increases. conclude advance been key force behind flattening price curves.

This paper derives a Phillips curve with imported commodities as an additional input in the production process. Given greater reliance on exogenously priced imported commodities in production then changes in output lead to a reduced impact on marginal costs and prices. The Phillips curve becomes ‡atter relative to the benchmark New Keynesian case. Empirical evidence supports the hypothesis that...