INFLATION AND OPENNESS: EMPIRICAL EVIDENCES FROM IRAN (1965-2010)

Mahyar Hami

Studies in Business and Economics, 2014, vol. 9, issue 2, 27-32

Abstract: The aim of this paper is to examine the causal relationship between inflation and openness in Iran emphasizing long-run relations during 1965 - 2010. To do so, I used growth rate of the consumer prices as the indicator of inflation and total exports and imports as a percentage of GDP to measure trade openness. Then I applied Vector Error Correction Model to estimate the proposed model. The results show that there is a one-way causal relationship from inflation to openness in Iran during the observation period and inflation has a positively significant impact on trade openness, so that 1% increase in inflation rate has led to approximately 0.12% increase in trade openness in the next period and 0.19% increase in trade openness in the next two period.

Keywords: Inflation; Openness; Iran`s Economy; Vector Error Correction Model (VECM) (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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