Openness and Inflation in Iran

Jafari Samimi, Ahmad and Ghaderi, Saman and Sanginabadi, Bahram (2011): Openness and Inflation in Iran. Published in: International Journal of Economics and Management Engineering (IJEME) , Vol. 1, No. 1 (December 2011)

Abstract

Abstract-The purpose of this paper is to test the hypothesis first documented by [1], that inflation is lower in more open economies. According to this hypothesis, central banks have a smaller incentive to engineer surprise inflations in more-open economies because the Phillips curve is steeper. We utilized the ARDL Bounds test approach to level relationship proposed by [2] for Iranian annual data over the period 1973-2007. Results from Bounds test approach confirm existence of long-run relationship among the variables under consideration. The results show that openness has negative and significant effect on inflation in short-run but its effect in long-run is not significant.

• Item Type: MPRA Paper
• Language: English
• Keywords: Keywords-Openness; Inflation; Iran; ARDL Bounds test approach.
• Subjects: E - Macroeconomics and Monetary Economics > E0 - General; E - Macroeconomics and Monetary Economics > E0 - General > E00 - General; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation

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