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Globalization and Inflation: Structural Evidence from a Time Varying VAR Approach

dc.contributor.author Bianchi, F
dc.contributor.author Civelli, A
dc.date.accessioned 2016-12-06T19:50:03Z
dc.date.available 2016-12-06T19:50:03Z
dc.date.issued 2013-07-01
dc.identifier.uri https://hdl.handle.net/10161/13222
dc.description.abstract Under the Globalization Hypothesis for inflation, as globalization increases, global economic slack should progressively replace the domestic gap in driving inflation. In order to assess the empirical support for this theoretical prediction, we use impulse response functions of inflation to domestic and foreign output gap shocks from a TV-VAR model estimated for eighteen countries. The main results of the analysis are twofold: First, the structural results show that global slack affects the dynamics of inflation in many countries, yet these effects do not get stronger over time. Second, a panel analysis that exploits the cross-section characteristics of the response functions shows that globalization, measured in terms of openness and business cycles integration, is positively related to the effects of global slack on inflation. The degree of openness of a country and its economic integration into the global economy are complementary rather than overlaid forces.
dc.format.extent 48 pages
dc.relation.ispartof Economic Research Initiatives at Duke (ERID)
dc.subject Globalization
dc.subject Inflation
dc.subject Time-variation
dc.subject VAR
dc.title Globalization and Inflation: Structural Evidence from a Time Varying VAR Approach
dc.type Journal article
pubs.issue 157
pubs.organisational-group Duke
pubs.organisational-group Economics
pubs.organisational-group Trinity College of Arts & Sciences


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