The Disappearing Openness-Inflation Relationship: A Cross-Country Analysis of Inflation Rates

Author/Editor:

M. F. Bleaney

Publication Date:

December 1, 1999

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The robust negative correlation between openness and inflation found in cross-country data for the 1970s and 1980s has disappeared in the 1990s. There is now a strong negative correlation of inflation with per capita GDP, as higher-income countries have achieved significant disinflation not emulated by lower-income countries. Since 1973, the most consistent finding is that floating exchange rate regimes are associated with inflation rates at least 10 percent a year higher than pegged exchange rate regimes, after allowing for other factors. There is also a consistent positive correlation between land area and inflation.

Series:

Working Paper No. 1999/161

Subject:

Exchange rate arrangements Floating exchange rates Foreign exchange Imports Inflation International trade Population and demographics Prices

English

Publication Date:

December 1, 1999

ISBN/ISSN:

9781451857795/1018-5941

Stock No:

WPIEA1611999

Pages:

16

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