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Openness and the Output-Inflation Tradeoff

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Abstract

Standard open economy models predict that openness to trade should exert a positive effect on the slope of the output-inflation tradeoff, or Phillips curve, but such a proposition finds very little support in the existing empirical literature. We propose a new test of this hypothesis based on new measures of the slope of the Phillips curve and more general cross-country regression models. The results provide strong empirical support for the standard theoretical prediction.

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File URL: http://www.nuff.ox.ac.uk/economics/papers/2003/W4/OpenOIT.pdf
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Bibliographic Info

Paper provided by Economics Group, Nuffield College, University of Oxford in its series Economics Papers with number 2003-W04.

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Length: 28 pages
Date of creation: 20 Feb 2003
Date of revision:
Handle: RePEc:nuf:econwp:0304

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Web page: http://www.nuff.ox.ac.uk/economics/

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Keywords: Openness; Inflation; Phillips curve;

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Citations

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Cited by:
  1. Adolfo Sachsida & Mário Jorge Cardoso de Mendonça, 2006. "Inflation and Trade Openness Revised: an Analysis Using Panel Data," Discussion Papers, Instituto de Pesquisa Econômica Aplicada - IPEA 1148, Instituto de Pesquisa Econômica Aplicada - IPEA.
  2. William Gruben & Darryl Mcleod, 2004. "The openness-inflation puzzle revisited," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 11(8), pages 465-468.
  3. Christopher Bowdler, 2005. "Openness, exchange rate regimes and the Phillips curve," Economics Papers, Economics Group, Nuffield College, University of Oxford 2005-W25, Economics Group, Nuffield College, University of Oxford.
  4. Christopher Bowdler, 2005. "Openness, exchange rate regimes and the Phillips curve," Economics Series Working Papers, University of Oxford, Department of Economics 2005-W25, University of Oxford, Department of Economics.

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