Financial Liberalization and Inflationary Dynamics: An Open Economy Analysis
AbstractThe paper analyzes the effects of financial liberalization on inflation. We develop a monetary and endogenous growth, dynamic general equilibrium model of a small open semi-industrialized economy, with financial intermediaries subjected to obligatory "high" reserve ratio, serving as the source of financial repression. When calibrated to four Southern European semi-industrialized countries, namely Greece, Italy, Spain and Portugal, that typically had high reserve requirements, the model indicates a positive inflation-financial repression relationship irrespective of the the specification of preferences. But the strength of the relationship obtained from the model is found to be much smaller in size than the corresponding empirical estimates.
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Bibliographic InfoPaper provided by University of Connecticut, Department of Economics in its series Working papers with number 2005-32.
Length: 31 pages
Date of creation: Jul 2005
Date of revision:
Note: This is a revised version of the third chapter of my dissertation at the University of Connecticut. I am particularly grateful to my major advisor Christian Zimmermann for many helpful comments and discussions. All remaining errors are mine.
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More information through EDIRC
Inflation; Financial Markets and the Macroeconomy;
Other versions of this item:
- Rangan Gupta, 2007. "Financial Liberalization and Inflationary Dynamics: An Open Economy Analysis," International Economic Journal, Taylor & Francis Journals, vol. 21(3), pages 335-360.
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-09-11 (All new papers)
- NEP-CBA-2005-09-11 (Central Banking)
- NEP-DGE-2005-09-11 (Dynamic General Equilibrium)
- NEP-FMK-2005-09-11 (Financial Markets)
- NEP-MAC-2005-09-11 (Macroeconomics)
- NEP-MON-2005-09-11 (Monetary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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