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Globalization, macroeconomic performance, and monetary policy / Frederic S. Mishkin

Author
Mishkin, Frederic S.
Published
Cambridge, Mass. : National Bureau of Economic Research, [2008]
Copyright Date
©2008
Physical Description
15 pages ; 22 cm.
Additional Creators
National Bureau of Economic Research
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Summary
The paper argues that many of the exaggerated claims that globalization has been an important factor in lowering inflation in recent years just do not hold up. Globalization does, however, have the potential to be stabilizing for individual economies and has been a key factor in promoting economic growth. The paper then examines four questions about the impact of globalization on the monetary transmission mechanism and arrives at the following answers: (1) Has globalization led to a decline in the sensitivity of inflation to domestic output gaps and thus to domestic monetary policy? No. (2) Are foreign output gaps playing a more prominent role in the domestic inflation process, so that domestic monetary policy has more difficulty stabilizing inflation? No. (3) Can domestic monetary policy still control domestic interest rates and so stabilize both inflation and output? Yes. (4) Are there other ways, besides possible influences on inflation and interest rates, in which globalization may have affected the transmission mechanism of monetary policy? Yes.
Subject(s)
Note
"April 2008."
Bibliography Note
Includes bibliographical references (pages 13-14).
Other Forms
Also available in PDF from the NBER World Wide Web site (www.nber.org).
View MARC record | catkey: 4443089