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Capital mobility and inflation persistence: theory and evidence from Greece
Author(s) -
Karfakis Costas,
Moschos Demetrios,
Sidiropoulos Moïse
Publication year - 2004
Publication title -
international journal of finance and economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 39
eISSN - 1099-1158
pISSN - 1076-9307
DOI - 10.1002/ijfe.236
Subject(s) - openness to experience , economics , persistence (discontinuity) , inflation (cosmology) , monetary economics , capital (architecture) , empirical evidence , exchange rate , econometrics , macroeconomics , keynesian economics , psychology , geography , epistemology , theoretical physics , engineering , social psychology , philosophy , physics , geotechnical engineering , archaeology
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.