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Trade Openness, Capital Mobility, and the Sacrifice Ratio

Joseph Daniels and David VanHoose

No 701, Working Papers and Research from Marquette University, Center for Global and Economic Studies and Department of Economics

Abstract: This paper develops and evaluates empirically the implications of a theoretical model of an open economy in which variations in both trade openness and capital mobility can influence the sacrifice ratio. Key predictions forthcoming from the model are that both forms of globalization can independently affect the capital ratio, once the influences of the level of central bank independence and the degree of wage stickiness in nations� economies are taken into account. Examination of cross-country data encompassing 58 disinflations for 16 countries yields evidence consistent with these essential predictions of the theoretical framework.

Keywords: Openness; Capital Mobility; Sacrifice Ratio (search for similar items in EconPapers)
JEL-codes: F40 F41 F43 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2007-01
New Economics Papers: this item is included in nep-cba, nep-int and nep-opm
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Published in the Open Economies Review, Vol 20(4), 2009, pages 473-487

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http://www.busadm.mu.edu/mrq/workingpapers/wpaper0701.pdf First Version, 2007 (application/pdf)

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