Globalization, inflation reducing globalization

The closer integration of the world’s goods markets has so far led to greater competitive pressure. The inevitable deregulation of markets (the removal or simplification of government rules and regulations that hamper the operation of market forces) simultaneously reduced the degree of monopoly in national economies. From the perspective of monetary policy, this flexibilization has had the effect of dampening prices (advantage of globalization; “globalization dividend”). – On the other hand, however, the inclusion of hitherto less developed countries in the course of globalization also increases demand for oil and metals, which leads to price increases. This may (over)compensate for the inflation-reducing effect. – See petroleum inflation, financialization. – Cf.
ECB Monthly Bulletin, June 2007, pp. 101 ff. (trends; comparisons with other regions; overviews).

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