Iranian Journal of Trade Studies

Iranian Journal of Trade Studies

The Effect of Globalization on Inflation: the New Approach of De Facto and De Jure Globalization of the KOF Index

Document Type : Research Paper

Authors
ahmad ezzati shouegholi 1
davod alirezazadeh sadagiani 2
reza mohammadpour 3
reza ezzati 4
1 Asisstant profosser, Department of Financial Affairs, School of Human Science, Afagh Higher Education Institute, Urmia, Iran. (Corresponding Author).
2 PhD, urmia university, Urmia, Iran,
3 Asisstant profosser, Department of Financial Affairs, School of Human Science, Afagh Higher Education Institute, Urmia, Iran.
4 MSc in Economics, Income expert of Salmas municipality, Salmas, Iran.
10.22034/ijts.2024.2025827.3973
Abstract
Some researchers and economists believe in the inflationary effects of globalization, while others argue the opposite or consider the economic conditions of countries as a crucial factor in how globalization impacts inflation. This study employs a time-varying nonparametric panel data model and considering the de facto and de jure effects of the KOF index. The main objective is to examine the various effects of globalization on inflation in high-income countries (28 countries) and middle-income countries (36 countries) using a time-varying approach. The model estimation results indicate that economic globalization, in terms of trade policies and regulations (de jure), has not significantly influenced the consumer price index (CPI) in high-income countries during most of the years under review. Additionally, economic globalization from aspect de facto has generally led to a reduction in prices in these countries over most years. In contrast, in middle-income countries, economic globalization in terms of trade development contributed (de facto) to a decrease in prices during the 1980s and 1990s, but this deflationary effect gradually diminished, almost disappearing by 2020. Furthermore, economic globalization in terms of trade policies and regulations (de jure) has had both positive and negative impacts on the CPI in these countries in different years.
Keywords
Inflation / Trade Openness / Time
Varying / Non
Parametric

Subjects

 
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  • Receive Date 02 April 2024
  • Revise Date 22 May 2024
  • Accept Date 12 June 2024