First, there is no consensus at a theoretical level on the relative importance of the various potential effects of globalisation on the inflation process through this channel. Second, the available empirical results provide no clear message either, except that, so far, there is not much evidence to support the view that globalisation has resulted in a flatter Phillips-curve, particularly in the euro area.
This situation is, of course, not very comforting for a central banker. The good news is that all studies point toward a lower “inflation bias”, although for different reasons. Another related issue is whether, and to what extent, globalisation has affected prices and wages more directly in the euro area product and labour markets in the short-to-medium term.