Openness and the Output-Inflation Tradeoff.

Working paper

Standard open economy models predict that openness to trade should exert a positive effect on the slope of the output-iflation tradeoff, or Phillips curve, but such a proposition fi…nds very little support in the existing empirical literature. We propose a new test of this hypothesis based on new measures of the slope of the Phillips curve and more general cross-country regression models. The results indicate some support for the standard theoretical prediction, but it is con…ned to those countries that have maintained floating exchange rate regimes.

Authors: Bowdler, C

• Publisher: Nuffield College (University of Oxford)
• Series: Economics Working Papers
• Publication date: 2003-01-01
• Language: English