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Openness and the Output-Inflation Tradeoff



Standard open economy models predict that openness to trade should exert a positive effect on the slope of the output-inflation tradeoff, or Phillips curve, but such a proposition finds very little support in the existing empirical literature. We propose a new test of this hypothesis based on new measures of the slope of the Phillips curve and more general cross-country regression models. The results provide strong empirical support for the standard theoretical prediction.

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  • Christopher Bowdler, 2003. "Openness and the Output-Inflation Tradeoff," Economics Papers 2003-W04, Economics Group, Nuffield College, University of Oxford.
  • Handle: RePEc:nuf:econwp:0304

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    References listed on IDEAS

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    Cited by:

    1. William Gruben & Darryl Mcleod, 2004. "The openness-inflation puzzle revisited," Applied Economics Letters, Taylor & Francis Journals, vol. 11(8), pages 465-468.
    2. Adolfo Sachsida & Mário Jorge Cardoso de Mendonça, 2006. "Inflation and Trade Openness Revised: an Analysis Using Panel Data," Discussion Papers 1148, Instituto de Pesquisa Econômica Aplicada - IPEA.
    3. Bowdler, Christopher, 2009. "Openness, exchange rate regimes and the Phillips curve," Journal of International Money and Finance, Elsevier, vol. 28(1), pages 148-160, February.
    4. Christopher Bowdler, 2005. "Openness, exchange rate regimes and the Phillips curve," Economics Series Working Papers 2005-W25, University of Oxford, Department of Economics.

    More about this item


    Openness; Inflation; Phillips curve;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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