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Inflation And Openness: Empirical Evidences From Iran (1965-2010)

Listed author(s):
  • HAMI Mahyar

    (Mazandaran University of Science & Technology, Babol, Iran)

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    The aim of this paper is to examine the causal relationship between inflation and openness in Iran emphasizing long-run relations during 1965 - 2010. To do so, I used growth rate of the consumer prices as the indicator of inflation and total exports and imports as a percentage of GDP to measure trade openness. Then I applied Vector Error Correction Model to estimate the proposed model. The results show that there is a one-way causal relationship from inflation to openness in Iran during the observation period and inflation has a positively significant impact on trade openness, so that 1% increase in inflation rate has led to approximately 0.12% increase in trade openness in the next period and 0.19% increase in trade openness in the next two period.

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    File URL: http://eccsf.ulbsibiu.ro/RePEc/blg/journl/923hami.pdf
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    Article provided by Lucian Blaga University of Sibiu, Faculty of Economic Sciences in its journal Studies in Business and Economics.

    Volume (Year): 9 (2014)
    Issue (Month): 2 (August)
    Pages: 27-32

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    Handle: RePEc:blg:journl:v:9:y:2014:i:2:p:27-32
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    Lucian Blaga University of Sibiu, Faculty of Economic Sciences Dumbravii Avenue, No 17, postal code 550324, Sibiu, Romania

    Phone: 004 0269 210375
    Fax: 004 0269 210375
    Web page: http://economice.ulbsibiu.ro/
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    1. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
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    3. Hanif, Muhammad N. & Batool, Irem, 2006. "Openness and Inflation: A Case Study of Pakistan," MPRA Paper 10214, University Library of Munich, Germany.
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    7. David Romer, 1993. "Openness and Inflation: Theory and Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 108(4), pages 869-903.
    8. Yutaka Kurihara, 2013. "International Trade Openness and Inflation in Asia," Research in World Economy, Research in World Economy, Sciedu Press, vol. 4(1), pages 70-75, March.
    9. 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.
    10. Gonzalo, Jesus, 1994. "Five alternative methods of estimating long-run equilibrium relationships," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 203-233.
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    12. Jafari Samimi, Ahmad & Ghaderi, Saman & Hosseinzadeh, Ramezan & Nademi, Younes, 2012. "Openness and inflation: New empirical panel data evidence," Economics Letters, Elsevier, vol. 117(3), pages 573-577.
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