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Composite trade shares measurement for trade openness on inflation among selected developing countries

This paper examines the nexus between trade openness and inflation among 42 selected developing countries between 1985 and 2014 using five years averages to validate the Romer hypothesis for the role played by trade openness in influencing inflation. As suggested by Romer hypothesis, trade openness...

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Main Authors: Tee, Heng Guan, Kaliappan, Shivee Ranjanee, Lee, Chin, Said, Rusmawati
Format: Article
Language:English
Published: Faculty of Economics and Management, Universiti Putra Malaysia 2018
Online Access:http://psasir.upm.edu.my/id/eprint/65313/1/9%29%20Composite%20Trade%20Shares%20measurement%20for%20Trade%20Openness.pdf
http://psasir.upm.edu.my/id/eprint/65313/
http://www.ijem.upm.edu.my/vol12no1/9)%20Composite%20Trade%20Shares%20measurement%20for%20Trade%20Openness.pdf
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spelling my.upm.eprints.653132018-10-05T07:30:34Z http://psasir.upm.edu.my/id/eprint/65313/ Composite trade shares measurement for trade openness on inflation among selected developing countries Tee, Heng Guan Kaliappan, Shivee Ranjanee Lee, Chin Said, Rusmawati This paper examines the nexus between trade openness and inflation among 42 selected developing countries between 1985 and 2014 using five years averages to validate the Romer hypothesis for the role played by trade openness in influencing inflation. As suggested by Romer hypothesis, trade openness has negative relationship with inflation yet there is no empirical consensus between trade openness and inflation. This paper follows the newly developed measurement proposed by Squalli and Wilson (2011) to consider a multidimensional index, composite trade shares, to measure for trade openness. The results from system GMM estimation indicated the rejection of Romer hypothesis when using Composite trade shares measurement for trade openness but support Romer hypothesis when using the trade shares measurement. The rejection of Romer’s hypothesis using the composite trade shares measurement suggests that policymakers need to aware of inflation following greater trade openness. Apart from that, income redistribution and greater government expenditures are important in reducing the negative impact brought by greater trade openness. Faculty of Economics and Management, Universiti Putra Malaysia 2018 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/65313/1/9%29%20Composite%20Trade%20Shares%20measurement%20for%20Trade%20Openness.pdf Tee, Heng Guan and Kaliappan, Shivee Ranjanee and Lee, Chin and Said, Rusmawati (2018) Composite trade shares measurement for trade openness on inflation among selected developing countries. International Journal of Economics and Management, 12 (1). pp. 173-187. ISSN 1823-836X; ESSN: 2600-9390 http://www.ijem.upm.edu.my/vol12no1/9)%20Composite%20Trade%20Shares%20measurement%20for%20Trade%20Openness.pdf
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description This paper examines the nexus between trade openness and inflation among 42 selected developing countries between 1985 and 2014 using five years averages to validate the Romer hypothesis for the role played by trade openness in influencing inflation. As suggested by Romer hypothesis, trade openness has negative relationship with inflation yet there is no empirical consensus between trade openness and inflation. This paper follows the newly developed measurement proposed by Squalli and Wilson (2011) to consider a multidimensional index, composite trade shares, to measure for trade openness. The results from system GMM estimation indicated the rejection of Romer hypothesis when using Composite trade shares measurement for trade openness but support Romer hypothesis when using the trade shares measurement. The rejection of Romer’s hypothesis using the composite trade shares measurement suggests that policymakers need to aware of inflation following greater trade openness. Apart from that, income redistribution and greater government expenditures are important in reducing the negative impact brought by greater trade openness.
format Article
author Tee, Heng Guan
Kaliappan, Shivee Ranjanee
Lee, Chin
Said, Rusmawati
spellingShingle Tee, Heng Guan
Kaliappan, Shivee Ranjanee
Lee, Chin
Said, Rusmawati
Composite trade shares measurement for trade openness on inflation among selected developing countries
author_facet Tee, Heng Guan
Kaliappan, Shivee Ranjanee
Lee, Chin
Said, Rusmawati
author_sort Tee, Heng Guan
title Composite trade shares measurement for trade openness on inflation among selected developing countries
title_short Composite trade shares measurement for trade openness on inflation among selected developing countries
title_full Composite trade shares measurement for trade openness on inflation among selected developing countries
title_fullStr Composite trade shares measurement for trade openness on inflation among selected developing countries
title_full_unstemmed Composite trade shares measurement for trade openness on inflation among selected developing countries
title_sort composite trade shares measurement for trade openness on inflation among selected developing countries
publisher Faculty of Economics and Management, Universiti Putra Malaysia
publishDate 2018
url http://psasir.upm.edu.my/id/eprint/65313/1/9%29%20Composite%20Trade%20Shares%20measurement%20for%20Trade%20Openness.pdf
http://psasir.upm.edu.my/id/eprint/65313/
http://www.ijem.upm.edu.my/vol12no1/9)%20Composite%20Trade%20Shares%20measurement%20for%20Trade%20Openness.pdf
_version_ 1643838278688833536
score 13.211869

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