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Capital Mobility and the Output-Inflation Tradeoff

Identifying determinants of the output-inflation tradeoff has long been a key issue in business cycle research. We provide evidence that in countries with greater restrictions on capital mobility, a given reduction in the inflation rate is associated with a smaller loss in output. This result is sho...

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Bibliographic Details
Main Author: Razin, Assaf
Other Authors: Loungani, Prakash, Yuen, Chi-Wa
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2000
Series:IMF Working Papers
Subjects:
Inflation
Balance Of Trade
Economic Theory
Currency; Foreign Exchange
Deflation
Neoclassical Through 1925 (austrian, Marshallian, Walrasian, Wicksellian)
Balance Of Payments
Trade Balance
Long-term Capital Movements
Open Economy Macroeconomics
Exports And Imports
Economic Theory & Philosophy
International Economics
Foreign Exchange
Price Level
International Trade
Neoclassical Theory
Capital Controls
Prices
Macroeconomics
Real Exchange Rates
Capital Movements
Empirical Studies Of Trade
Neoclassical School Of Economics
International Investment
United States
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:Identifying determinants of the output-inflation tradeoff has long been a key issue in business cycle research. We provide evidence that in countries with greater restrictions on capital mobility, a given reduction in the inflation rate is associated with a smaller loss in output. This result is shown to be consistent with theoretical presumption from a version of the Mundell-Fleming model. Restrictions on capital mobility are measured using the IMF’s Annual Report on Exchange Rate Arrangements and Exchange Restrictions. Estimates of the output-inflation tradeoff are taken from previous studies, viz., Lucas (1973) and Ball, Mankiw and Romer (1988)
Physical Description:22 pages
ISBN:9781451851014

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