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The openness-inflation puzzle revisited

  • William Gruben
  • Darryl Mcleod

Dynamic panel estimates show the negative relation between trade openness and inflation found by Romer (Quarterly Journal of Economics, (VIII, 869-903, 1993) but questioned by Terra (Quarterly Journal of Economics, (XIII, 641-48, 1998) became more robust in the 1990s, both among high income OECD and developing countries. Trade openness was also associated with less variable inflation during the 1990s and had a stronger disinflation effect in economies with floating exchange rates.

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Article provided by Taylor & Francis Journals in its journal Applied Economics Letters.

Volume (Year): 11 (2004)
Issue (Month): 8 ()
Pages: 465-468

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Handle: RePEc:taf:apeclt:v:11:y:2004:i:8:p:465-468
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  1. Christopher Bowdler, 2004. "Openness and the output-inflation tradeoff," Money Macro and Finance (MMF) Research Group Conference 2003 7, Money Macro and Finance Research Group.
  2. Lane, Philip R., 1997. "Inflation in open economies," Journal of International Economics, Elsevier, vol. 42(3-4), pages 327-347, May.
  3. Maria Cristina Terra, 1995. "Openess and inflation: a new assessment," Textos para discussão 339, Department of Economics PUC-Rio (Brazil).
  4. Guender, Alfred V. & McCaw, Sharon, 2000. "The inflationary bias in a model of the open economy: a note," Economics Letters, Elsevier, vol. 68(2), pages 173-178, August.
  5. David Romer, 1991. "Openness and inflation: theory and evidence," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
  6. M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
  7. David Romer, 1998. "A New Assessment Of Openness And Inflation: Reply," The Quarterly Journal of Economics, MIT Press, vol. 113(2), pages 649-652, May.
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