A survey of the effect of trade openness size on inflation rate in Iran using ARDL

Mostafa Salimifar, Mohammad Javd Razmi and Zahra Taghizadegan
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Mostafa Salimifar: Ferdowsi University of Mashhad, Iran
Mohammad Javd Razmi: Ferdowsi University of Mashhad, Iran
Zahra Taghizadegan: Ferdowsi University of Mashhad, Iran

Theoretical and Applied Economics, 2015, vol. XXII, issue 3(604), Autumn, 143-154

Abstract: The purpose of this study is to examine the relationship between trade openness size and inflation rate in Iran using ARDL method for the period 1973 to 2010. There is a robust negative relationship across countries, first documented by Romer (1993), between a country’s openness to trade and its long-run inflation rate. Given that Iran’s economy is dependent on oil incomes and as these incomes influence on inflation, non-oil trade openness has been used in this study. The results show that this variable has negative significant effect on inflation through this period. Other control variables i.e. Growth of Liquidity, exchange rate and output gap affect inflation in the expected directions.

Keywords: Openness; Globalization; Inflation; Exchange Rate. (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (3)

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