The relationship between trade openness and inflation is an important field of study that is frequently studied by researchers.According to the hypothesis, which is prominent in these studies and is called as the Romer hypothesis, inflation rates will decrease as commercial openness increases in small and open countries.In this study, defined as the Next 11 countries are Bangladesh, Indonesia, the Philippines, South Korea, Iran, Mexico, Egypt, Nigeria, Pakistan, Turkey and Vietnam aims to determine the relationship between the trade openness and inflation rate.Panel ARDL analysis was performed by using the data of 1996-2018 for the specified countries in line with the specified purpose.The results of the study show that, in contrast to the Romer Hypothesis, trade openness in Next 11 countries increases inflation.There was a positive relationship between trade openness and inflation variables both in the short term and long term.The fact that the error correction coefficient reached is negative and statistically significant confirms the long-term cointegration relationship between the variables of trade openness and inflation rate.
📌 3 Key Takeaways
🎯
Objective & Hypothesis:The relationship between trade openness and inflation is an important field of study that is frequently studied by researchers.According to the hypothesis, which is prominent in these studies and is called as the Romer hypothesis, inflation rates will decrease as commercial openness increases in small and open countries.In this study, defined as the Next 11 countries are Bangladesh, Indonesia, the Philippines, South Korea, Iran, Mexico, Egypt, Nigeria, Pakistan, Turkey and Vietnam aims to determine the relationship between the trade openness and inflation rate.Panel ARDL analysis was performed by using the data of 1996-2018 for the specified countries in line with the specified purpose.The results of the study show that, in contrast to the Romer Hypothesis, trade openness in Next 11 countries increases inflation.There was a positive relationship between trade openness and inflation variables both in the short term and long term.The fact that the error correction coefficient reached is negative and statistically significant confirms the long-term cointegration relationship between the variables of trade openness and inflation rate.
📊
Key Findings & Data:The relationship between trade openness and inflation is an important field of study that is frequently studied by researchers.According to the hypothesis, which is prominent in these studies and is called as the Romer hypothesis, inflation rates will decrease as commercial openness increases in small and open countries.In this study, defined as the Next 11 countries are Bangladesh, Indonesia, the Philippines, South Korea, Iran, Mexico, Egypt, Nigeria, Pakistan, Turkey and Vietnam aims to determine the relationship between the trade openness and inflation rate.Panel ARDL analysis was performed by using the data of 1996-2018 for the specified countries in line with the specified purpose.The results of the study show that, in contrast to the Romer Hypothesis, trade openness in Next 11 countries increases inflation.There was a positive relationship between trade openness and inflation variables both in the short term and long term.The fact that the error correction coefficient reached is negative and statistically significant confirms the long-term cointegration relationship between the variables of trade openness and inflation rate.
💡
Conclusion & Impact:The relationship between trade openness and inflation is an important field of study that is frequently studied by researchers.According to the hypothesis, which is prominent in these studies and is called as the Romer hypothesis, inflation rates will decrease as commercial openness increases in small and open countries.In this study, defined as the Next 11 countries are Bangladesh, Indonesia, the Philippines, South Korea, Iran, Mexico, Egypt, Nigeria, Pakistan, Turkey and Vietnam aims to determine the relationship between the trade openness and inflation rate.Panel ARDL analysis was performed by using the data of 1996-2018 for the specified countries in line with the specified purpose.The results of the study show that, in contrast to the Romer Hypothesis, trade openness in Next 11 countries increases inflation.There was a positive relationship between trade openness and inflation variables both in the short term and long term.The fact that the error correction coefficient reached is negative and statistically significant confirms the long-term cointegration relationship between the variables of trade openness and inflation rate.
The relationship between trade openness and inflation is an important field of study that is frequently studied by researchers.According to the hypothesis, which is prominent in these studies and is called as the Romer hypothesis, inflation rates will decrease as commercial openness increases in small and open countries.In this study, defined as the Next 11 countries are Bangladesh, Indonesia, the Philippines, South Korea, Iran, Mexico, Egypt, Nigeria, Pakistan, Turkey and Vietnam aims to determine the relationship between the trade openness and inflation rate.Panel ARDL analysis was performed by using the data of 1996-2018 for the specified countries in line with the specified purpose.The results of the study show that, in contrast to the Romer Hypothesis, trade openness in Next 11 countries increases inflation.There was a positive relationship between trade openness and inflation variables both in the short term and long term.The fact that the error correction coefficient reached is negative and statistically significant confirms the long-term cointegration relationship between the variables of trade openness and inflation rate.
Özet
Ticari dışa açıklık ile enflasyon arasındaki ilişki araştırmacılar tarafından sıklıkla incelenen önemli bir çalışma alanıdır. Bu çalışmalar içerisinde öne çıkan ve Romer hipotezi olarak nitelendirilen hipoteze göre küçük ve dışa açık ülkelerde ticari dışa açıklık arttıkça enflasyon oranları azalacaktır. Bu çalışmada Next 11 olarak tanımlanan Bangladeş, Endonezya, Filipinler, Güney Kore, İran, Meksika, Mısır, Nijerya, Pakistan, Türkiye ve Vietnam’da ticari dışa açıklık ile enflasyon oranı arasındaki ilişkinin test edilmesi amaçlanmaktadır. Belirlenen amaç doğrultusunda belirtilen ülkelere ait 1996-2018 yıllarına ait veriler kullanılarak panel ARDL analizi gerçekleştirilmiştir. Panel ARDL analizi kapsamında uygun tahminciyi belirlemek adına Hausman testinden yararlanılmış ve PMG tahmincisi tercih edilmiştir. Ulaşılan sonuçlar, Romer Hipotezi’nin aksine Next 11 ülkelerinde ticari dışa açıklığın enflasyonu artırdığını ortaya koymaktadır. Ticari dışa açıklık ve enflasyon değişkenleri arasında hem kısa dönemde hem de uzun dönemde pozitif yönlü bir ilişkinin varlığı tespit edilmiştir. Yine ulaşılan hata düzeltme katsayısının negatif yönlü ve istatistiksel olarak anlamlı olması ticari dışa açıklık ve enflasyon oranı değişkenlerinin uzun dönemde koentegrasyon ilişkisini doğrular niteliktedir.
ÇOBAN, M. N. (2020). The Relation between Trade Openness and Inflation within the scope of the Romer Hypothesis: Panel ARDL Analysis for the Next 11 Countries. Gümüşhane Üniversitesi Sosyal Bilimler Enstitüsü Elektronik Dergisi, Cilt: 11 - Sayı: 3, 651–660. https://ajindex.com/articles/78728
Afzal, M., Muhammad E. M., Abdul, R. B. & Kalsoom, F. (2013). Openness, inflation and growth relationships in Pakistan: an application of ARDL bounds testing approach, Pakistan Economic and Social Review, 51 (1): 13-53.
Göçer, İ., Mercan, M., ve Hotunluoğlu, H. (2012). Seçilmiş OECD ülkelerinde cari işlemler açığının sürdürülebilirliği: Yatay kesit bağımlılığı altında çoklu yapısal kırılmalı panel veri analizi, Maliye dergisi, 163, 449-470.
Granato, J., Lo, M. & Wong, M. (2007). A note on Romer’s openness inflation relation: the responsiveness of AS and AD to economic openness and monetary policy, Journal of Applied Economics, 39(2), 191-197.
Güler, A. ve Özyurt, H. (2011). Merkez bankası bağımsızlığı ve reel ekonomik performans: Panel ARDL analizi, Ekonomi Bilimleri Dergisi, 3(2), 11-20.
Güneş, Ş. ve Konur, F. (2013). Türkiye ekonomisinde dışa açıklık ve enflasyon ilişkisi üzerine ampirik bir analiz, Eskişehir Osmangazi Üniversitesi İİBF Dergisi, 8 (1), 7-20.
Güriş, S. (2015).
Stata ile panel veri modelleri, Der Yayınları,
İstanbul.
Hanif, M. & Batool, I. (2006). Openness and inflation: a case study of Pakistan”, MPRA Paper, 10214. Haq, I. U., Alotaish, M. S. M., Kumara, N. G. S. & Otamurodov, S. (2014). Revisiting the Romer’s hypothesis: time series evidence from small open economy, Pakistan Journal of Applied Economics, 24 (1), 1-15.
Idris, J., Yusop, Z., & Habibullah, M. S. (2016). Trade openness and economic growth: c causality test in panel perspective, International Journal of Business and Society, 17(2), 281 – 290. Israr, F. & de Sousa, M. R. (2018). Long run analysis of trade openness on economic growth for Pakistan: evidence from standard and optimal time series tests, CEFAGE-UE Working Papers, 2018 (01), University of Evora, Portugal. Jung, W. S. & Marshall, P. J. (1985). Exports, growth and causality in developing countries, Journal of Development Economics, 18 (1), pp. 1-12.
Kızılgöl, Ö. A. ve İpek, E. (2015). Türkiye’de enflasyon ile ticaret açıklığı arasındaki ilişki, Anadolu Üniversitesi Sosyal Bilimler Dergisi, 15(4), 43-54.
Kurihara, Y. (2013). International trade openness and inflation in Asia, Research in World Economy, 4 (1), 70-75.
Mahmoudzadeh, M. & Shadabi, L. (2012). Inflation and trade freedom: an empirical analysis, World Applied Sciences Journal, 18(2): 286-291.
Mercan, M. ve Göçer, İ. (2014). Ticari dışa açıklığın ekonomik etkileri: Orta Asya ülkeleri için ampirik bir analiz. Uluslararası Yönetim İktisat ve İşletme Dergisi, 10