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Capital mobility and inflation persistence: theory and evidence from Greece

  • Costas Karfakis

    (University of, Macedonia, Greece)

  • Demetrios Moschos

    (University of Athens, Greece)

  • Moïse Sidiropoulos

This paper examines the relationship between the openness of the capital account and inflation persistence. In the theoretical part we find that in a fixed (floating) exchange rate regime inflation persistence is negatively (positively) associated with the intensity of capital controls. In the empirical part of the paper we analyse the dynamics of the inflation rate in Greece by associating inflation persistence with the capital account openness and we find evidence in favour of a positive relationship. Copyright © 2004 John Wiley & Sons, Ltd.

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Article provided by John Wiley & Sons, Ltd. in its journal International Journal of Finance & Economics.

Volume (Year): 9 (2004)
Issue (Month): 2 ()
Pages: 125-133

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Handle: RePEc:ijf:ijfiec:v:9:y:2004:i:2:p:125-133
DOI: 10.1002/ijfe.236
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  12. Bennett T. McCallum, 1981. "On Non-Uniqueness in Rational Expectations Models: An Attempt at Perspective," NBER Working Papers 0684, National Bureau of Economic Research, Inc.
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