The objective of this study is to analyse the impact of the domestic output gap and the foreign output gap on domestic inflation through trade openness within the Phillips curve of the open economy. Using quarterly data for the period 2001-2016 and a non-linear threshold model, the research results support the hypothesis of inflation globalisation and present partial impacts of globalisation on the economy of Vietnam. The foreign output gap is statistically significant and has the same effects on domestic inflation while the impact of the domestic output gap on domestic inflation is not statistically significant.
