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Globalization and Monetary Policy

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  • Cohen, Lior

Abstract

I examine how globalization affects monetary policy, focusing on the labor market, imported inflation, and international spillovers by exploring the flattening of the Phillips Curve, where the traditional link between inflation and unemployment has weakened, potentially allowing central banks to pursue more accommodative policies. I also analyze how global integration complicates taming inflation and investigate how central banks’ policies impact other economies. By integrating empirical evidence and theoretical perspectives, this study provides insights into central banks’ evolving challenges in a globalized economy, offering implications for policy adjustments in response to global economic dynamics.

Suggested Citation

  • Cohen, Lior, 2022. "Globalization and Monetary Policy," EconStor Preprints 306556, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esprep:306556
    DOI: 10.13140/RG.2.2.35201.67688
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    References listed on IDEAS

    as
    1. Kristin Forbes, 2019. "Has globalization changed the inflation process?," BIS Working Papers 791, Bank for International Settlements.
    2. Brent Neiman, 2014. "The Global Decline of the Labor Share," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(1), pages 61-103.
    3. Raphael A. Auer & Claudio Borio & Andrew Filardo, 2017. "The Globalisation of Inflation: The Growing Importance of Global Value Chains," CESifo Working Paper Series 6387, CESifo.
    4. Anna Stansbury & Lawrence H. Summers, 2020. "The Declining Worker Power Hypothesis: An Explanation for the Recent Evolution of the American Economy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(1 (Spring), pages 1-96.
    5. Kohlscheen, Emanuel & Moessner, Richhild, 2022. "Globalisation and the slope of the Phillips curve," Economics Letters, Elsevier, vol. 216(C).
    6. Robert J. Gordon, 1997. "The Time-Varying NAIRU and Its Implications for Economic Policy," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 11-32, Winter.
    7. Jonathon Hazell & Juan Herreño & Emi Nakamura & Jón Steinsson, 2022. "The Slope of the Phillips Curve: Evidence from U.S. States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(3), pages 1299-1344.
    8. James H. Stock & Mark W. Watson, 2020. "Slack and Cyclically Sensitive Inflation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(S2), pages 393-428, December.
    9. Michael McLeay & Silvana Tenreyro, 2020. "Optimal Inflation and the Identification of the Phillips Curve," NBER Macroeconomics Annual, University of Chicago Press, vol. 34(1), pages 199-255.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Globalization; unconventional monetary policy; Philips curve flattening; inflation dynamics;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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