Commentary: Inflation Pressures and Monetary Policy in a Global Economy
by Jordi Galí
CREI, Universitat Pompeu Fabra, and Barcelona GSE
What can estimated reduced-form inflation equations teach us regarding the role of global factors as determinants of inflation? Very little, according to modern monetary theory. I illustrate this claim by exploring the channels through which global factors influence inflation in the small open economy of Galí
and Monacelli (2005).
JEL Codes: E31, F41.
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