Trade Openness, Capital Mobility, and the Sacrifice Ratio |
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Authors: | Joseph P. Daniels David D. VanHoose |
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Affiliation: | (1) Department of Economics, Marquette University, Straz Hall, P.O. Box 1881, Milwaukee, WI 53201-1881, USA;(2) Hankamer School of Business, Baylor University, P.O. Box 8003, Waco, TX 76798-8003, USA |
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Abstract: | This paper develops and evaluates empirically the implications of a theoretical model of an open economy in which variations in both trade openness and capital mobility can influence the sacrifice ratio. Key predictions forthcoming from the model are that both forms of globalization can independently affect the sacrifice ratio, once the influences of the level of central bank independence and the degree of wage stickiness in nations’ economies are taken into account. Examination of cross-country data encompassing 58 disinflations for 16 countries yields evidence consistent with these essential predictions of the theoretical framework. |
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