Capital Mobility and the Output-Inflation Tradeoff [electronic resource] / Assaf Razin.
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TextSeries: IMF Working Papers; Working Paper ; No. 00/87Publication details: Washington, D.C. : International Monetary Fund, 2000Description: 1 online resource (22 p.)ISBN: 1451851014 :ISSN: 1018-5941Subject(s): Aggregate Demand | Capital Mobility | Inflation Rate | Openness | Output-Inflation Tradeoff | Argentina | Germany | Ireland | Japan | United StatesAdditional physical formats: Print Version:: Capital Mobility and the Output-Inflation TradeoffOnline resources: IMF e-Library | IMF Book Store Abstract: 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).
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).
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