Globalization and inflation nexus: further evidence based on bootstrap panel causality

Globalization and inflation nexus: further evidence based on bootstrap panel causality Recent empirical studies find the effect of globalization on the inflation differ in sign and size across countries. These findings call attention to control cross-country heterogeneity. In order to account for both dependency and heterogeneity across countries, this study investigates the causal linkages between globalization and inflation in 21 OECD countries by using panel causality analysis for the period 1970–2010. In this study, we find globalization has significantly changed some major industrialized countries’ inflation and the effect of globalization on the inflation exhibits a high degree of heterogeneity. Consistent with the view of negative impact of globalization on inflation, we find that the coefficient is negative and significant in most of the cases. Regarding the direction of inflation-globalization nexus, we find one-way Granger causality running from inflation to globalization for Hungary and Poland. Furthermore, we find a feedback between globalization and inflation for Italy only. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Quality & Quantity Springer Journals

Globalization and inflation nexus: further evidence based on bootstrap panel causality

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Publisher
Springer Journals
Copyright
Copyright © 2014 by Springer Science+Business Media Dordrecht
Subject
Social Sciences, general; Methodology of the Social Sciences; Social Sciences, general
ISSN
0033-5177
eISSN
1573-7845
D.O.I.
10.1007/s11135-014-0030-y
Publisher site
See Article on Publisher Site

Abstract

Recent empirical studies find the effect of globalization on the inflation differ in sign and size across countries. These findings call attention to control cross-country heterogeneity. In order to account for both dependency and heterogeneity across countries, this study investigates the causal linkages between globalization and inflation in 21 OECD countries by using panel causality analysis for the period 1970–2010. In this study, we find globalization has significantly changed some major industrialized countries’ inflation and the effect of globalization on the inflation exhibits a high degree of heterogeneity. Consistent with the view of negative impact of globalization on inflation, we find that the coefficient is negative and significant in most of the cases. Regarding the direction of inflation-globalization nexus, we find one-way Granger causality running from inflation to globalization for Hungary and Poland. Furthermore, we find a feedback between globalization and inflation for Italy only.

Journal

Quality & QuantitySpringer Journals

Published: May 6, 2014

References

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