On balance, however, empirical evidence provides mixed support for the notion that global measures of economic slack played a large role in the observed weakening in the relationship between prices and common measures of (domestic) economic slack in the euro area. 6 Indeed, this weakening has to be judged in the context of a multitude of economic and also policy factors.
The streamlined characterisation of price effects I have described thus far, of course, does not capture the numerous and complex other aspects of globalisation relevant for monetary policy. In particular, in addition to trade globalisation and its price effects, financial globalisation could also impact on other phenomena relevant for monetary policy, such as global liquidity and long-term interest rates.