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

Michael Bleaney

No 1999/161, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; exchange rate; regime score; GDP; inflation rate; inflation; openness; openness coefficient; openness-inflation correlation; regime regression; inflation aversion parameter; dependent variable; rate of inflation; Exchange rate arrangements; Floating exchange rates; Imports; Global (search for similar items in EconPapers)
Pages: 16
Date: 1999-12-01
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Citations: View citations in EconPapers (20)

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