Trade Openness and Inflation Performance: A Panel Data Analysis in the Context of African Countries.

This paper tests the hypothesis of a negative relation between openness and inflation in the context of African countries. A dynamic model of inflation in which openness enters alternately as an endogenous and exogenous variable is estimated with different panel data estimation procedures. The paper finds no robust evidence that openness served as a mechanism to restrain inflation in the region. On the contrary, the results suggest that increased openness, treated as an endogenous variable, is associated with higher inflation on holding constant such factors as food supply constraint and level of economic development which are found significant co-determinants. [ABSTRACT FROM AUTHOR]