We evaluate the performance of inflation forecasts based on the open-economy Phillips curve by exploiting the spatial pattern of international propagation of inflation. We model these spatial linkages using global inflation and either domestic slack or oil price fluctuations, motivated by a...

We investigate empirically the inflation dynamics in New Zealand, a small open economy and a pioneer in inflation targeting, under various open-economy Phillips curve specifications. Our forecasting exercise suggests that open-economy Phillips curves under standard measures of global slack do...

The Phillips curve, which posits a relationship between inflation and domestic economic activity, introduces a crucial trade-off between real and nominal objectives for the central bank. Atkeson and Ohanian (2001), among others, present evidence that forecasts of U.S. inflation from Phillips...

We evaluate the performance of inflation forecasts based on the open-economy Phillips curve by exploiting the spatial pattern of international propagation of inflation. We model these spatial linkages using global inflation and either domestic slack or oil price fluctuations, motivated by a...

The Phillips curve, which posits a relationship between inflation and domestic economic activity, introduces a crucial trade-off between real and nominal objectives for the central bank. Atkeson and Ohanian (2001), among others, present evidence that forecasts of U.S. inflation from Phillips...

We investigate empirically the inflation dynamics in New Zealand, a small open economy and a pioneer in inflation targeting, under various open-economy Phillips curve specifications. Our forecasting exercise suggests that open-economy Phillips curves under standard measures of global slack do...

Data for the U.S. and the Euro-area during the post-Bretton Woods period shows that nominal and real exchange rates are more volatile than consumption, very persistent, and highly correlated with each other. Standard models with nominal rigidities match reasonably well the volatility and...

The open-economy dimension is central to the discussion of the trade-offs that monetary policy faces in an increasingly integrated world. I investigate the monetary policy transmission mechanism in a two-country workhorse New Keynesian model where policy is set according to Taylor (1993) rules....

In many countries, inflation has become less responsive to domestic factors and more responsive to global factors over the past decades. We introduce money and credit into the workhorse open-economy New Keynesian model. With this framework, we show that: (i) an efficient forecast of domestic...

In many countries, inflation has become less responsive to domestic factors and more responsive to global factors over the past several decades. We study the linkages between domestic inflation and global liquidity (money and household balances) and argue that it is important for inflation...