Does the WTO Have Deflationary Impact?

Abstract

The aim of this article is to study the relationship between WTO membership and inflation in member countries. Based on expected benefits of WTO membership, the author hypothesize that WTO has had deflationary impact in member economies, especially for the economies joined the organization after 2000. In this context, the research covers 17 countries of which 8 are low income and lower middle income, 5 are upper middle income and 4 are high income countries. After carrying out time-series analysis for each country and panel data analysis for each income level group, the research concludes that the relationship differs across countries. Although in many countries, the impact of WTO membership over inflation is negative, countries such as Vietnam and Ukraine observe statistically positive impact. Despite of some exceptions, findings of this research defend the hypothesis that WTO membership has deflationary impact.

Keywords: WTO; Deflationary Impact; Inflation; Time-Series Analysis; Panel Data Analysis; WTO Members

JEL Classification: F13; F15; F53; F62