Citation: Shahid, A., Ahmad, H. K., & Liaqat, S. (2020). Inflation, Globalization and Interest Rate Nexus to Curb Price volatility: An Empirical Cross-Country Analysis. Global Economics Review, V(I), 153-165. doi:10.31703/ger.2020(V-I).12 URL: http://dx.doi.org/10.31703/ger.2020(V-I).12 Page: 153 – 165 DOI: 10.31703/ger.2020(V-I).12 p-ISSN: 2521-2974 e-ISSN: 2707-0093 L-ISSN: 2521-2974 Vol. V, No. I (Winter 2020) Abstract Inflation, Globalization and Interest Rate Nexus to Curb Price volatility: An Empirical Cross-Country Analysis Arshi Shahid * Hafiz Khalil Ahmad † Saima Liaqat ‡ The aim of the present study is to investigate the long run impact of monetary policy and globalization on inflation in the selected South and South East Asian countries. The study measures the impact of monetary policy variables on inflation, ignoring random shocks as these are considered fewer fractions for the inconsistency of the policy instruments. Two exclusive dimensions, defacto and dejure measure of globalization, are taken into account. The study also employed Hodrick Prescott filter to calculate the domestic output gap in order to assess that still changes in domestic output gap is relevant to inflation variation. It employed structural modeling dynamic heterogeneous Panel data estimation technique, which accounts for endogeneity and serial correlation issues. The results of the study confirm that both global and domestic factors have significant and descriptive power for domestic inflation and interest rate is found to be a best nominal anchor to effect inflation. Key Words: Globalization, Inflation, Monetary Policy, Output Gap JEL Classification: F02, E31, E52, E32 Introduction The closing decades of the past century witnessed the episode of an integrated system of economics, politics and culture due to the revolutionary developments introduced in the fields of transportation and information technology. This development gave birth to a new phenomenon named globalization which received a new impetus in the form of internet revolution and better transportation. Furthermore, a considerable decline in the cost of communication and transportation apart from increasing the interaction among the various cultures of the world actualized the very notion of global market. The changing pattern of monetary policy and increasing integration has been witnessed as major unsettled issues around the globe during the previous decade. The suspected collapse of the money-inflation nexus, steadiness of money demand in several economies and the usefulness of the Phillips curve recently called fourth unending debates among researchers. All of these issues do encompass some implications to carry out monetary policy in an integrated environment. * PhD Scholar, Department of Economics, University of the Punjab, Lahore, Punjab, Pakistan. Email: arshishahid70@yahoo.com † Professor, Department of Economics, Govt. College Women University, Sialkot, Punjab, Pakistan. ‡ Lecturer, Department of Economics, Lahore College for women university, Jhang Campus, Punjab, Pakistan.