Openness, income-tax progressivity, and inflation

Daniels, Joseph P.; VanHoose, David D.

doi:10.1016/j.jmacro.2008.10.003

Cited by 3 publications

(3 citation statements)

References 33 publications

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“…Badinger (2009) has obtained results consistent with this prediction in an analysis of data from 91 countries over the [1985][1986][1987][1988][1989][1990][1991][1992][1993][1994][1995][1996][1997][1998][1999][2000][2001][2002][2003][2004] interval. Recent work has added other elements that can impinge on the relationship between trade openness and the sacrifice ratio: political regime (Caporale and Caporale, 2008), progressivity of income taxation (Daniels and VanHoose, 2009a), capital mobility (Daniels and VanHoose, 2009b), labor-market structures (Bowdler and Nunziata, 2010), reliance on imported commodities in production (Pickering and Valle, 2012).…”

Section: Introductionmentioning

confidence: 99%

Exchange-rate pass through, openness, and the sacrifice ratio

Daniels

VanHoose

2013

Journal of International Money and Finance

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Considerable recent work has reached mixed conclusions about whether and how globalization affects the inflation-output trade-off and suggests that the ultimate effect of openness on the output-inflation relationship is influenced by a variety of factors. In this paper, we consider the impact of exchange-rate pass through and examine how pass through conditions the effect of openness on the sacrifice ratio. We develop a simple theoretical model showing how the extent of both pass through and openness can interact to influence the output-inflation relationship. Next we empirically explore the nature of these two variables and their interaction. Results indicate that greater pass through increases the sacrifice ratio, that there is statistically significant interaction between pass through and openness, andonce the extent of pass through is taken into account alongside other factors that affect the sacrifice ratio, such as central bank independence-openness fails to exert an empirically robust effect on the sacrifice ratio.

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Section: Introductionmentioning

confidence: 99%

Exchange-rate pass through, openness, and the sacrifice ratio

Daniels

VanHoose

2013

Journal of International Money and Finance

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“…2SLS results indicated that larger trade and financial openness reduced central bank's independency which yield to less inflation that is attached with larger output-inflation tradeoff. Daniels and Vanhoose (2007) considered open economy with degree of incometax progressivity influenced on the interaction between openness, central bank independence and prices by using data of 17 countries from 1979 to 1999. Regression analysis of cross-country inflation provided favor inverse relationship between inflation 11 Hong Kong, Korea, Mexico, Philippines, Singapore, and Taiwan. 12 Canada, France, Germany, Italy, Japan, U.K. and the United States.…”

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confidence: 99%

Relationship between Trade Openness and Inflation: Empirical Evidences from Pakistan (1976-2010).

Munir¹,

Kiani²

2022

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This study empirically verifies the existence of significant relationship between inflation and trade openness for Pakistan using annual time-series data for the period of 1976 to 2010. The basic objective of this study is to examine the Romer‘s hypothesis for Pakistan with real agriculture value added, real exchange rate, real gross domestic product, financial market openness, money and quasi money and used trade openness, import openness and export openness ratios separately as explanatory variables with inflation rate as dependent variables. For this purpose, we have used multivariate Johansen (1998) and Johansen and Juselius (1990) Maximum Likelihood Cointegration Approach and a Vector Error Correction Model (VECM) and the expected empirical findings shows that there is a significant positive long-run relationship between inflation and trade openness, which rejects the existence of Romer‘s hypothesis for Pakistan. JEL classification: B26, E31, P24, P44 Keywords: Trade Openness, Inflation, Unit Root Testing, Multivariate Cointegration Approach, Vector Error Correction Model, Pakistan

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“…show that an increased responsiveness of domestic spending to the real terms of trade and an enlargement of the share of domestic labor markets with nominal rigidities also cause output to be more responsive to inflation, and Daniels and VanHoose (2009a) show that increased progressivity of income taxation can have a similar effect. In addition, Daniels, Nourzad, and VanHoose (2005) suggest that any factor, such as a greater degree of openness or an increase in central bank independence, that has the effect of pushing down mean inflation can also lead to greater nominal rigidities.…”

Section: How Greater Openness Might Make Aggregate Output More Inflatmentioning

confidence: 91%

Implications of Globalization for the Output-inflation Relationship: an Assessment

2014

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Abstract:During the past two decades, a growing body of research has explored the implications of increased trade and financial openness for the relationship between output and inflation. This paper reviews proposed theoretical channels through which the degree of openness might ultimately affect the output-inflation trade-off and surveys the empirical studies that have sought to determine the net effect of greater openness on this trade-off. In addition, the paper utilizes a single cross-country dataset to evaluate, taking into account recent developments in the literature, the likely sign and significance of this net effect. In particular, we find current data implies that there is a negative and significant relationship between openness and the sacrifice ratio, regardless of the transmission channel that is proposed.

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Openness, income-tax progressivity, and inflation

Cited by 3 publications

References 33 publications

Exchange-rate pass through, openness, and the sacrifice ratio

Exchange-rate pass through, openness, and the sacrifice ratio

Relationship between Trade Openness and Inflation: Empirical Evidences from Pakistan (1976-2010).

Implications of Globalization for the Output-inflation Relationship: an Assessment

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