Globalisation and the slope of the Phillips curve

Emanuel Kohlscheen, Richhild Moessner

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

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Year of publication:	October 2021
Authors:	Kohlscheen, Emanuel ; Moessner, Richhild
Publisher:	Munich, Germany : CESifo, Center for Economic Studies & Ifo Institute
Subject:	inflation \| globalisation \| openness \| output gap \| Phillips curve \| Phillips-Kurve \| Globalisierung \| Globalization \| Inflation \| Theorie \| Theory \| Produktionspotenzial \| Potential output \| Bruttoinlandsprodukt \| Gross domestic product \| Welt \| World