Globalisation will ultimately only influence relative prices, not absolute price levels. Finally, some have proposed extending the domestic Phillips curves by adding a proxy of global economic slack. A recent BIS study (Borio/Filardo (2007)) finds empirical evidence in support of the assumption that economies have become more sensitive to changes in global factors. However, the idea is still controversial.
In particular, the robustness of the preliminary estimates has been challenged (Bernanke (2007), Ihrig et al (2007)). Irrespective of the empirical underpinning, there are serious practical problems with including global economic slack in the day-to-day decision-making process, not least because the task of finding a meaningful measure of global slack seems daunting.