There are two competing views on the impact of globalisation on domestic inflation. One view is that the global component of inflation by and large reflects price swings in energy and commodity markets. Globalisation may affect underlying inflation, but these effects are judged to be economically small. The alternative view is that global economic slack matters for domestic underlying inflation and that globalisation may have lowered the sensitivity of inflation to domestic slack, that is the slope of the Phillips curve. Although the strength of such global factors may differ across economies, a failure to properly ... (full story)