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dc.contributor.authorDaniels, Joseph P.
dc.contributor.authorVanHoose, David D.
dc.date.accessioned2005-08-13T17:45:15Z
dc.date.available2005-08-13T17:45:15Z
dc.date.copyrightJanuary 8, 2003, Revised May 24, 2004
dc.date.issued2005-08-13T17:45:15Z
dc.identifier.urihttp://hdl.handle.net/2104/323
dc.description.abstractThe standard time-inconsistency-based explanation for the negative correlation between openness and inflation requires an inverse relationship between the sacrifice ratio and openness, but Daniels et al. (forthcoming) have provided evidence that controlling for central bank independence reveals a positive relationship. This paper embeds the time-inconsistency approach within a model of a multisector, imperfectly competitive, open economy. In this setting, greater openness raises the sacrifice ratio but reduces the inflation bias. Thus, failure to observe an inverse relationship between openness and the sacrifice ratio does not necessarily imply that the time-inconsistency approach is irrelevant to understanding the openness-inflation relationship.en
dc.format.extent230398 bytes
dc.format.mimetypeapplication/pdf
dc.language.isoen_USen
dc.relation.ispartofseriesBaylorBusiness Economics: Working Papers Seriesen
dc.relation.ispartofseries2005-058-ECOen
dc.subjectOpen Economy Macroeconomicsen
dc.subjectJEL Classification: F41en
dc.titleOpenness, the Sacrifice Ratio, and Inflation: Is there a Puzzle?en
dc.typeWorking Paperen


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