Recent research suggests that the Phillips curve slope, measured using sacrifice ratios from the period 1961-88, is positively related to trade openness, contradicting the Romer [1993. Openness and inflation: theory and evidence. Quarterly Journal of Economics 108, 869-903.] hypothesis that...

We consider the open economy consequences of U.S. monetary policy, extending the identification approach of Romer and Romer (2004) and adapting it for use with asset prices. Intended policy changes are orthogonalized against the economy's expected future path, which captures any effects from...