Openness and Inflation in Iran
AbstractAbstract-The purpose of this paper is to test the hypothesis first documented by , that inflation is lower in more open economies. According to this hypothesis, central banks have a smaller incentive to engineer surprise inflations in more-open economies because the Phillips curve is steeper. We utilized the ARDL Bounds test approach to level relationship proposed by  for Iranian annual data over the period 1973-2007. Results from Bounds test approach confirm existence of long-run relationship among the variables under consideration. The results show that openness has negative and significant effect on inflation in short-run but its effect in long-run is not significant.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 52408.
Date of creation: Dec 2011
Date of revision:
Keywords-Openness; Inflation; Iran; ARDL Bounds test approach.;
Find related papers by JEL classification:
- E0 - Macroeconomics and Monetary Economics - - General
- E00 - Macroeconomics and Monetary Economics - - General - - - General
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
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