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

16 Pages Posted: 9 Feb 2006

See all articles by Michael Bleaney

Michael Bleaney

University of Nottingham - School of Economics

Date Written: December 1999

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: Exchange rate, inflation, openness

JEL Classification: E31, F41

Suggested Citation

Bleaney, Michael, The Disappearing Openness-Inflation Relationship: A Cross-Country Analysis of Inflation Rates (December 1999). IMF Working Paper No. 99/161, Available at SSRN: https://ssrn.com/abstract=880816

Michael Bleaney (Contact Author)

University of Nottingham - School of Economics ( email )

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