Domestic and Global Output Gaps as Inflation Drivers: What Does the Phillips Curve Tell?

Arbeitspapier

We study how domestic and global output gaps affect CPI inflation. We use a New-Keynesian Phillips curve framework which controls for nonlinear exchange rate movements for a panel of 26 advanced and 22 emerging economies covering the 1994Q1-2017Q4 period. We find broadly that both global and domestic output gaps are significant drivers of inflation both in the pre-crisis (1994-2008) and post-crisis (2008-2017) periods. Furthermore, after the crisis, in advanced economies the effect of the domestic output gap declines, while in emerging economies the effect of the global output gap declines. The paper demonstrates the usefulness of the New Keynesian Phillips curve in identifying the impact of global and domestic output gaps on inflation.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 7337

Classification and Topics

• Classification: Wirtschaft ; Price Level; Inflation; Deflation ; Central Banks and Their Policies ; Economic Impacts of Globalization: Macroeconomic Impacts
• Subject: output gaps ; global factors ; inflation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Jašová, Martina ; Moessner, Richhild ; Takáts, Előd
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/185535
• Last update: 10.03.2025, 11:43 AM CET