Journal Article

No. 2013-25 | June 05, 2013
Globalisation Effect on Inflation in the Great Moderation Era: New Evidence from G10 Countries PDF Icon

Abstract

Dynamic econometric models are built individually for ten countries from G10 during the Great Moderation period, with the aim of analysing counterfactually the globalisation effect on inflation. The main findings are (i) the effect is highly heterogeneous from country to country; (ii) increases in trade openness could be either inflationary or deflationary whereas increased imports from low-cost emerging-market economies are mostly deflationary; and (iii) there is almost no direct globalisation impact as far as inflation persistence is concerned while the impact on inflation variability can be positive as well as negative. Overall, globalisation is found to have contributed positively to lowering rather than stabilising inflation during the Great Moderation era.

JEL Classification

C52 E31 E37 F41

Citation

Duo Qin and Xinhua He (2013). Globalisation Effect on Inflation in the Great Moderation Era: New Evidence from G10 Countries. Economics: The Open-Access, Open-Assessment E-Journal, 7 (2013-25): 1—32. http://dx.doi.org/10.5018/economics-ejournal.ja.2013-25

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