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Openness-Inflation Puzzle: Evidence from Pakistan

Khalil Ahmad and Haider Mahmood ()

Bangladesh Development Studies, 2013, vol. 36, issue 3, 69-78

Abstract: In the literature, there is evidence of an inverse relation between trade openness and inflation which has been widely questioned. More recently, economic openness has been related to aggregate demand and supply to shed light on inverse openness-inflation in the developed countries. This paper contributes to the literature by examining the long run connection between trade openness and inflation in a developing country, Pakistan, using the Autoregressive Distributed Lag. The empirical finding suggests that the negative openness-inflation relationship holds for Pakistan.

Keywords: Inflation; Openness; Cointegration; ARDL (search for similar items in EconPapers)
JEL-codes: E31 F41 (search for similar items in EconPapers)
Date: 2013
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