Document Type

Article

Publication Date

9-2009

Source Publication

Open Economics Review

Abstract

This paper develops and evaluates empirically the implications of a theoretical model of an open economy in which variations in both trade openness and capital mobility can influence the sacrifice ratio. Key predictions forthcoming from the model are that both forms of globalization can independently affect the sacrifice ratio, once the influences of the level of central bank independence and the degree of wage stickiness in nations’ economies are taken into account. Examination of cross-country data encompassing 58 disinflations for 16 countries yields evidence consistent with these essential predictions of the theoretical framework.

Comments

Originally published in Open Economics Review, Volume 20, No. 4 (September 2009), DOI: 10.1007/s11079-008-9093-5.