TY  - JOUR
AU  - Mishkin,Frederic S.
TI  - Globalization, Macroeconomic Performance, and Monetary Policy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13948
PY  - 2008
Y2  - April 2008
UR  - http://www.nber.org/papers/w13948
L1  - http://www.nber.org/papers/w13948.pdf
N1  - Author contact info:
Frederic S. Mishkin
Columbia University
Graduate School of Business
Uris Hall 817
3022 Broadway
New York, NY 10027
Tel: 212-854-3488
Fax: 212/662-8474
E-Mail: fsm3@columbia.edu
AB  - 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.
ER  -