Document Type
Article
Publication Date
2006
Abstract
Temple (2002) argues that the inflation level used in Romer (1993) lacks power in revealing the policy intentions of monetary authorities. Temple also points out that Romer's use of the openness--inflation correlation cannot be explained by time consistency theory. In this article, we demonstrate that more open economies experience less inflation volatility and persistence. We attribute our findings to the hypothesis that monetary authorities in more open economies adopt more aggressive monetary policies. This pattern emerges strongly after 1990. Our results indicate that the near-universal regime shift in 1990 is not just a simple process of increased monetary policy aggressiveness, but an increased response to economic openness.
DOI
10.2307/20111844
Recommended Citation
Jim Granato, Melody Lo and M. C. Sunny Wong. Testing Monetary Policy Intentions in Open Economies. Southern Economic Journal Vol. 72, No. 3 (Jan., 2006), pp. 730-746
Comments
This article was published by the Southern Economic Association, and is available at: http://dx.doi.org/10.2307/20111844