IDEAS home Printed from https://ideas.repec.org/a/ijf/ijfiec/v9y2004i2p125-133.html
   My bibliography  Save this article

Capital mobility and inflation persistence: theory and evidence from Greece

Author

Listed:
  • Costas Karfakis

    (University of, Macedonia, Greece)

  • Demetrios Moschos

    (University of Athens, Greece)

  • Moïse Sidiropoulos

Abstract

This paper examines the relationship between the openness of the capital account and inflation persistence. In the theoretical part we find that in a fixed (floating) exchange rate regime inflation persistence is negatively (positively) associated with the intensity of capital controls. In the empirical part of the paper we analyse the dynamics of the inflation rate in Greece by associating inflation persistence with the capital account openness and we find evidence in favour of a positive relationship. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • Costas Karfakis & Demetrios Moschos & Moïse Sidiropoulos, 2004. "Capital mobility and inflation persistence: theory and evidence from Greece," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 9(2), pages 125-133.
    • Handle: RePEc:ijf:ijfiec:v:9:y:2004:i:2:p:125-133
    DOI: 10.1002/ijfe.236
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1002/ijfe.236
    File Function: Link to full text; subscription required
    Download Restriction: no
    File URL: https://libkey.io/10.1002/ijfe.236?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jordan, Thomas J., 1999. "Central bank independence and the sacrifice ratio," European Journal of Political Economy, Elsevier, vol. 15(2), pages 229-255, June.
    2. David Romer, 1993. "Openness and Inflation: Theory and Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(4), pages 869-903.
    3. Alogoskoufis, George S & Smith, Ron, 1991. "The Phillips Curve, the Persistence of Inflation, and the Lucas Critique: Evidence from Exchange-Rate Regimes," American Economic Review, American Economic Association, vol. 81(5), pages 1254-1275, December.
    4. Loungani, Prakash & Razin, Assaf & Yuen, Chi-Wa, 2001. "Capital mobility and the output-inflation tradeoff," Journal of Development Economics, Elsevier, vol. 64(1), pages 255-274, February.
    5. Dornbusch, Rudiger & Fischer, Stanley, 1993. "Moderate Inflation," The World Bank Economic Review, World Bank, vol. 7(1), pages 1-44, January.
    6. Guy Debelle & Stanley Fischer, 1994. "How independent should a central bank be?," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 38, pages 195-225.
    7. Zivot, Eric & Andrews, Donald W K, 2002. "Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 25-44, January.
    8. Pierre-Richard Agénor & Mark P. Taylor, 1992. "Testing for Credibility Effects," IMF Staff Papers, Palgrave Macmillan, vol. 39(3), pages 545-571, September.
    9. Taylor, John B, 1980. "Aggregate Dynamics and Staggered Contracts," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 1-23, February.
    10. Laurence Ball & N. Gregory Mankiw & David Romer, 1988. "The New Keynsesian Economics and the Output-Inflation Trade-off," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1), pages 1-82.
    11. Robert J. Gordon, 1982. "Why Stopping Inflation May Be Costly: Evidence from Fourteen Historical Episodes," NBER Chapters, in: Inflation: Causes and Effects, pages 11-40, National Bureau of Economic Research, Inc.
    12. Thomas J. Sargent, 1981. "Stopping moderate inflations: the methods of Poincaré and Thatcher," Working Papers 1, Federal Reserve Bank of Minneapolis.
    13. Laurence Ball, 1994. "What Determines the Sacrifice Ratio?," NBER Chapters, in: Monetary Policy, pages 155-193, National Bureau of Economic Research, Inc.
    14. Carl E. Walsh, 1994. "Central bank independence and the costs of disinflation in the EC," Working Papers in Applied Economic Theory 94-04, Federal Reserve Bank of San Francisco.
    15. Andreas Fischer, 1996. "Central bank independence and sacrifice ratios," Open Economies Review, Springer, vol. 7(1), pages 5-18, January.
    16. McCallum, Bennett T., 1983. "On non-uniqueness in rational expectations models : An attempt at perspective," Journal of Monetary Economics, Elsevier, vol. 11(2), pages 139-168.
    17. Mankiw, N Gregory, 1990. "A Quick Refresher Course in Macroeconomics," Journal of Economic Literature, American Economic Association, vol. 28(4), pages 1645-1660, December.
    18. Gruben, William C. & McLeod, Darryl, 2002. "Capital account liberalization and inflation," Economics Letters, Elsevier, vol. 77(2), pages 221-225, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Roy Cerqueti & Mauro Costantini & Luciano Gutierrez, 2009. "New panel tests to assess inflation persistence," Working Papers 54-2009, Macerata University, Department of Finance and Economic Sciences, revised Oct 2009.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Giuseppe Diana & Mose Sidiropoulos, 2004. "Central Bank Independence, Speed of Disinflation and the Sacrifice Ratio," Open Economies Review, Springer, vol. 15(4), pages 385-402, October.
    2. Hofstetter, Marc, 2008. "Disinflations in Latin America and the Caribbean: A free lunch?," Journal of Macroeconomics, Elsevier, vol. 30(1), pages 327-345, March.
    3. Laurence Ball, 1994. "What Determines the Sacrifice Ratio?," NBER Chapters, in: Monetary Policy, pages 155-193, National Bureau of Economic Research, Inc.
    4. Athanasios Papadopoulos & Moïse Sidiropoulos, "undated". "Central Bank Independence, Exchange Rate Policy and Inflation Persistence Empirical Evidence on Selected EMU Countries," Working Papers 0107, University of Crete, Department of Economics.
    5. Assaf Razin, 2004. "Aggregate Supply and Potential Output," NBER Working Papers 10294, National Bureau of Economic Research, Inc.
    6. Kenny, Geoff & McGettigan, Donal, 1997. "Low Inflation or Price Stability? A Look at the Issues," Research Technical Papers 3/RT/97, Central Bank of Ireland.
    7. Hasanov, Mübariz & Araç, Aysen & Telatar, Funda, 2010. "Nonlinearity and structural stability in the Phillips curve: Evidence from Turkey," Economic Modelling, Elsevier, vol. 27(5), pages 1103-1115, September.
    8. Thomas Jordan, 1997. "Disinflation costs, accelerating inflation gains, and central bank independence," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 133(1), pages 1-21, March.
    9. Andrea Vaona, 2015. "The price-price Phillips curve in small open economies and monetary unions: theory and empirics," International Economics and Economic Policy, Springer, vol. 12(2), pages 281-307, June.
    10. Joseph Daniels & David VanHoose, 2009. "Trade Openness, Capital Mobility, and the Sacrifice Ratio," Open Economies Review, Springer, vol. 20(4), pages 473-487, September.
    11. Mankiw, N Gregory, 2001. "The Inexorable and Mysterious Tradeoff between Inflation and Unemployment," Economic Journal, Royal Economic Society, vol. 111(471), pages 45-61, May.
    12. Gbaguidi, David, 2012. "La courbe de Phillips : temps d’arbitrage et/ou arbitrage de temps," L'Actualité Economique, Société Canadienne de Science Economique, vol. 88(1), pages 87-119, mars.
    13. Sergio Rossi, 2004. "Inflation Targeting and Sacrifice Ratios : The Case of the European Central Bank," International Journal of Political Economy, Taylor & Francis Journals, vol. 34(2), pages 69-85.
    14. Daniels, Joseph P. & VanHoose, David D., 2013. "Exchange-rate pass through, openness, and the sacrifice ratio," Journal of International Money and Finance, Elsevier, vol. 36(C), pages 131-150.
    15. Razin, Assaf & Loungani, Prakash, 2005. "Globalization and Disinflation: The Efficiency Channel," CEPR Discussion Papers 4895, C.E.P.R. Discussion Papers.
    16. Huang, Ho-Chuan & Yeh, Chih-Chuan & Wang, Xiuhua, 2019. "Inflation targeting and output-inflation tradeoffs," Journal of International Money and Finance, Elsevier, vol. 96(C), pages 102-120.
    17. Down Ian, 2009. "Central Bank Independence, Disinflations and Monetary Policy," Business and Politics, De Gruyter, vol. 10(3), pages 1-22, January.
    18. Ernst Baltensperger & Peter Kugler, 2000. "Central Bank Independence and Sacrifice Ratios: Some Further Considerations," Open Economies Review, Springer, vol. 11(2), pages 111-125, April.
    19. Joseph Daniels & Sandeep Mazumder & David VanHoose, 2015. "Implications of Globalization for the Output-inflation Relationship: an Assessment," Open Economies Review, Springer, vol. 26(1), pages 39-60, February.
    20. Yuen Chi-Wa, 2002. "Openness And The Output-Inflation Tradeoff: Floating Vs. Fixed Exchange Rates," International Economic Journal, Taylor & Francis Journals, vol. 16(4), pages 1-26.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ijf:ijfiec:v:9:y:2004:i:2:p:125-133. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley-Blackwell Digital Licensing or Christopher F. Baum (email available below). General contact details of provider: http://www.interscience.wiley.com/jpages/1076-9307/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.