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The openness-inflation puzzle revisited

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  • William Gruben
  • Darryl Mcleod

Abstract

Dynamic panel estimates show the negative relation between trade openness and inflation found by Romer (Quarterly Journal of Economics, (VIII, 869-903, 1993) but questioned by Terra (Quarterly Journal of Economics, (XIII, 641-48, 1998) became more robust in the 1990s, both among high income OECD and developing countries. Trade openness was also associated with less variable inflation during the 1990s and had a stronger disinflation effect in economies with floating exchange rates.

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Bibliographic Info

Article provided by Taylor and Francis Journals in its journal Applied Economics Letters.

Volume (Year): 11 (2004)
Issue (Month): 8 ()
Pages: 465-468

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Handle: RePEc:taf:apeclt:v:11:y:2004:i:8:p:465-468

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  1. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
  2. David Romer, 1998. "A New Assessment Of Openness And Inflation: Reply," The Quarterly Journal of Economics, MIT Press, vol. 113(2), pages 649-652, May.
  3. Guender, Alfred V. & McCaw, Sharon, 2000. "The inflationary bias in a model of the open economy: a note," Economics Letters, Elsevier, vol. 68(2), pages 173-178, August.
  4. Lane, Philip R., 1997. "Inflation in open economies," Journal of International Economics, Elsevier, vol. 42(3-4), pages 327-347, May.
  5. David Romer, 1991. "Openness and inflation: theory and evidence," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
  6. Christopher Bowdler, 2004. "Openness and the output-inflation tradeoff," Money Macro and Finance (MMF) Research Group Conference 2003 7, Money Macro and Finance Research Group.
  7. Cristina T. Terra, 1998. "Openness And Inflation: A New Assessment," The Quarterly Journal of Economics, MIT Press, vol. 113(2), pages 641-648, May.
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Cited by:
  1. Lein, Sarah M. & León-Ledesma, Miguel A. & Nerlich, Carolin, 2008. "How is real convergence driving nominal convergence in the new EU Member States?," Journal of International Money and Finance, Elsevier, vol. 27(2), pages 227-248, March.
  2. C. Bowdler & L. Nunziata, 2007. "Trade Union Density and Inflation Performance: Evidence from OECD Panel Data," Economica, London School of Economics and Political Science, vol. 74(293), pages 135-159, 02.
  3. Tahir Mukhtar, 2010. "Does Trade Openness Reduce Inflation? Empirical Evidence from Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(2), pages 35-50, Jul-Dec.
  4. Christopher Bowdler & Adeel Malik, 2005. "Openness and inflation volatility: cross-country evidence," CSAE Working Paper Series 2005-08, Centre for the Study of African Economies, University of Oxford.
  5. Jeffrey Frankel, 2009. "Comment on "The Simple Geometry of Transmission and Stabilization in Closed and Open Economies"," NBER Chapters, in: NBER International Seminar on Macroeconomics 2007, pages 119-129 National Bureau of Economic Research, Inc.
  6. Ciżkowicz, Piotr & Rzońca, Andrzej, 2010. "Inflation and corporate investment in selected OECD countries in the years 1960-2005 – an empirical analysis," MPRA Paper 29846, University Library of Munich, Germany.
  7. Paul Cavelaars, 2005. "Globalisation and Monetary Policy," DNB Working Papers 048, Netherlands Central Bank, Research Department.
  8. César Calderón & Klaus Schmidt Hebbel, 2008. "What Drives Inflation in the World?," Working Papers Central Bank of Chile 491, Central Bank of Chile.
  9. Harald Badinger, 2008. "Globalization,the Output-Inflation Tradeoff, and Inflation," FIW Working Paper series 010, FIW.
  10. Cavelaars, Paul, 2009. "Does globalisation discipline monetary policymakers?," Journal of International Money and Finance, Elsevier, vol. 28(3), pages 392-405, April.
  11. Barlow, David, 2010. "How did structural reform influence inflation in transition economies?," Economic Systems, Elsevier, vol. 34(2), pages 198-210, June.
  12. Mark A. Wynne & Erasmus K. Kersting, 2007. "Openness and inflation," Staff Papers, Federal Reserve Bank of Dallas, issue Apr.
  13. Siklos, Pierre L., 2010. "Meeting Maastricht: Nominal convergence of the new member states toward EMU," Economic Modelling, Elsevier, vol. 27(2), pages 507-515, March.
  14. Ernest Gnan & Maria Theresa Valderrama, 2006. "Globalization, Inflation and Monetary Policy," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 4, pages 37-54, January 2.
  15. Christopher Bowdler & Luca Nunziata, 2004. "Labour Markets Institutions and Inflation Performance: Evidence from OECD panel data," Money Macro and Finance (MMF) Research Group Conference 2004 29, Money Macro and Finance Research Group.

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