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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
    DOI: 10.1515/mjss-2017-0054
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    Citations

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    Cited by:

    1. Sameer Mostafa Abumdallala, 2019. "The Relationship Between Imports and Inflation in Palestine: Toda and Yamamoto Causality Analysis," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 10(2), pages 17-21, March.
    2. Jeffrey Kouton, 2018. "An Asymmetric Analysis of the Relationship between Openness and Inflation in C te d'Ivoire," International Journal of Economics and Financial Issues, Econjournals, vol. 8(6), pages 65-75.
    3. Jelilov Gylych & Abdullahi Ahmad Jbrin & Bilal Celik & Abdurrahman Isik, 2020. "The Effect of Oil Price Fluctuation on the Economy of Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 10(5), pages 461-468.
    4. Yuanyuan Hao, 2023. "The dynamic relationship between trade openness, foreign direct investment, capital formation, and industrial economic growth in China: new evidence from ARDL bounds testing approach," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-11, December.
    5. Francis Obeng Afari & Jong Chil Son & Horlali Yaw Haligah, 2021. "Empirical analysis of the relationship between openness and inflation: a case study of sub-Saharan Africa," SN Business & Economics, Springer, vol. 1(6), pages 1-23, June.
    6. 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.
    7. Rahman, Mohammad Mafizur & Alam, Khosrul, 2021. "Clean energy, population density, urbanization and environmental pollution nexus: Evidence from Bangladesh," Renewable Energy, Elsevier, vol. 172(C), pages 1063-1072.

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