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Capital Mobility and the Output-Inflation Tradeoff
Author:
Assaf Razin null

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Mr. Prakash Loungani
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Chi-Wa Yuen null

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Series:
IMF Working Papers
Volume/Issue:
Volume 2000: Issue 087
Language:
English
Publication Date:
01 May 2000
DOI:
https://doi.org/10.5089/9781451851014.001
ISBN:
9781451851014
ISSN:
1018-5941
Pages:
22
Keywords:
WP; Phillips curve; Output-inflation tradeoff; capital mobility; capital controls; openness; immobility case; price level; mobility regime; aggregate demand elasticity; capital immobility; Real exchange rates; Inflation; Neoclassical theory; Trade balance; Africa
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Identifying determinants of the output-inflation tradeoff has long been a key issue in business cycle research. We provide evidence that in countries with greater restrictions on capital mobility, a given reduction in the inflation rate is associated with a smaller loss in output. This result is shown to be consistent with theoretical presumption from a version of the Mundell-Fleming model. Restrictions on capital mobility are measured using the IMF’s Annual Report on Exchange Rate Arrangements and Exchange Restrictions. Estimates of the output-inflation tradeoff are taken from previous studies, viz., Lucas (1973) and Ball, Mankiw and Romer (1988).
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund