Openness and inflation volatility: Panel data evidence |
| |
Affiliation: | 1. Department of Economics, University of Oxford, Manor Road, Oxford OX1 3UQ, UK;2. Oxford Centre for Islamic Studies and Department of International Development, University of Oxford, Queen Elizabeth House, 3 Mansfield Road, Oxford OX1 3TB, UK;1. Development Bank of Mongolia, Mongolia;2. University of Manchester, United Kingdom;3. Centre for Growth and Business Cycle Research, United Kingdom |
| |
Abstract: | Trade openness can affect inflation volatility via the incentives faced by policy-makers or the structure of production and consumption, but the sign of this effect, as predicted from economic theory, is ambiguous. This paper provides evidence for a negative effect of openness on inflation volatility using a dynamic panel model that controls for the endogeneity of openness and the effects of both average inflation and the exchange rate regime. Our results offer one explanation for the recent decline in inflation volatility observed in many countries. The relationship is shown to be strongest amongst developing and emerging market economies, and we argue that the mechanisms linking openness and inflation volatility are likely to be strongest amongst this group of countries. |
| |
Keywords: | Trade openness Inflation Volatility Globalisation |
本文献已被 ScienceDirect 等数据库收录! |
|