Another look at global disinflation

This paper highlights relative price adjustments taking place in the global economy as important sources of the lower levels of inflation rates observed in the recent decades. Using a markup model, it shows substantial effects from declines in wage costs and import prices relative to consumer prices...

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Bibliographic Details
Published in:Journal of the Japanese and international economies 2009-06, Vol.23 (2), p.220-239
Main Author: Sekine, Toshitaka
Format: Article
Language:English
Subjects:
Disinflation
Dynamic factor model
Global disinflation
Global economy
Imports
Inflation
International
Markup model
Markup model Open-economy New Keynesian Phillips curve Dynamic factor model Global disinflation
Markups
Modelling
Monetary policy
Open-economy New Keynesian Phillips curve
Price level changes
Prices
Relative prices
Studies
Wages
World economy
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Summary:This paper highlights relative price adjustments taking place in the global economy as important sources of the lower levels of inflation rates observed in the recent decades. Using a markup model, it shows substantial effects from declines in wage costs and import prices relative to consumer prices. Out of the five percentage point decline in the inflation rates in eight OECD countries from 1970–1989 to 1990–2006, global shocks to two relative prices account for more than 1.5 percentage points, while a monetary policy shock accounts for another one percentage point. J. Japanese Int. Economies 23 (2) (2009) 220–239.
ISSN:0889-1583
1095-8681
DOI:10.1016/j.jjie.2008.12.002