The implications of globalization for inflation

• Main Author: Παναγιωτοπούλου, Βερενίκη
• Other Authors: Panagiotopoulou, Vereniki
• Language: English
• Published: 2022
• Subjects: Παγκοσμιοποίηση; Πληθωρισμός; Πάνελ παλινδρόμηση; Globalization; Inflation; Panel regression

This study aims to investigate the effects of globalization for inflation. By using panel data , we estimate fixed effects regressions with the method of local projections introduced by Jordà (2005) and test how globalization affects core inflation , the harmonized consumer price index of services as well as non-energy industrial goods. We test the globalization hypothesis on twenty seven European countries and nineteen Eurozone area countries separately. We find evidence that globalization can moderate the increase in inflation after a widening of the output gap and a rise in inflation expectations in European countries.