ABSTRACT
More and more researchers emphasize the synchronization of the business cycle between countries and the fact that inflation is a global phenomenon and it is the international and supranational factors that are largely responsible for the inflation rates seen in national economies. Hence, this chapter examines the international aspects of the Cantillon effect – in the modern global economy the growth of money supply in one country (especially in a large economy on a global scale or in a country that is the issuer of reserve currency) may also lead to significant distribution and price effects in other countries. The chapter broadens and extends the research of the international business cycle, which omits the first-round effect, and the Austrian theory of the business cycle, which in its traditional approach examines a closed economy. The discussion of the Cantillon effect on international scale leads to conclusions that are extremely important for the theory of economics and monetary policy. Contrary to many opinions, national fiat currencies do not provide isolation from global inflation processes and international cycles. In a modern global economy, a given country can experience inflationary processes and the business cycle, even when it conducts a relatively restrictive monetary policy.
