Financial liberalization and inflationary dynamics : an open economy analysis
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Date
Authors
Gupta, Rangan
Journal Title
Journal ISSN
Volume Title
Publisher
Taylor & Francis
Abstract
This paper analyzes the effects of financial liberalization on inflation. We develop an open economy monetary endogenous growth general equilibrium model, with financial intermediaries subjected to obligatory 'high' reserve ratio, serving as the source of financial repression. When calibrated to four Southern European semi-industrialized countries, namely Greece, Italy, Spain and Portugal, which typically had high reserve requirements, the model indicates a positive inflation-financial repression relationship irrespective of the specification of preferences. But the strength of the relationship obtained from the model is found to be much smaller in size than the corresponding empirical estimates.
Description
Keywords
Inflation, Financial markets, Macroeconomy
Sustainable Development Goals
Citation
Gupta, R 2007, 'Financial liberalization and inflationary dynamics: an open economy analysis', International Economic Journal, vol. 21, no. 3, pp. 335-360. [http://www.tandf.co.uk/journals/titles/10168737.asp]