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Investigating the Causal Relationship between Inflation and Trade Openness using Toda–Yamamoto Approach: Evidence from Zambia

Author

Listed:
  • Zombe Chibvalo
  • Daka Lincoln
  • Phiri Christopher

    (Department of Economics, Copperbelt University, Kitwe, Zambia)

  • Kaonga Oliver
  • Seshamani Venkatesh

    (Department of Economics, University of Zambia, Lusaka, Zambia)

  • Chibwe Francis

    (Rural Electrification Authority, Lusaka, Zambia)

Abstract

The paper examines whether a significant relationship exists between inflation and trade openness in Zambia over the period 1985 to 2015. We use the Toda-Yamamoto approach to Granger causality to test for a causal relationship between inflation and trade openness. The results establish a bi-directional causality between inflation and trade openness. Further, there exists a positive relationship between inflation and trade openness in Zambia. Our findings stress the importance for central banks to understand the consequences of international trade for domestic inflation.

Suggested Citation

  • Zombe Chibvalo & Daka Lincoln & Phiri Christopher & Kaonga Oliver & Seshamani Venkatesh & Chibwe Francis, 2017. "Investigating the Causal Relationship between Inflation and Trade Openness using Toda–Yamamoto Approach: Evidence from Zambia," Mediterranean Journal of Social Sciences, Sciendo, vol. 8(6), pages 171-182, November.
  • Handle: RePEc:vrs:mjsosc:v:8:y:2017:i:6:p:171-182:n:18
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    Cited by:

    1. Alimi, R. Santos & Olorunfemi, Sola, 2018. "Does Inflation Uncertainty Matter for Validity of Romer’s Hypothesis? Evidence from Nigeria," MPRA Paper 90948, University Library of Munich, Germany.
    2. repec:jfr:ijba11:v:10:y:2019:i:2:p:17-21 is not listed on IDEAS
    3. repec:eco:journ1:2018-06-10 is not listed on IDEAS

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