Openness And Inflation: Evidence From Nine Eastern European Nations

Abstract

Correlation coefficients between inflation and openness were estimated, with data from 1996 to 2010, for Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Ukraine. Eight of the nine coefficients were, as proposed by macroeconomics, negative, although the coefficients for Bulgaria, Estonia, Latvia and Ukraine were not significant. Lithuania's positive and significant coefficient suggested that if openness would not have increased, inflation would have been higher. Cross-country coefficients estimated for 1996, 2000, 2005 and 2010 were negative but not significant due to large differences between the inflation rates of countries that had very similar rates of openness.