Investigating the Causal Relationship between Inflation and Trade Openness using Toda–Yamamoto Approach: Evidence from Zambia

Authors

  • Chibvalo Zombe Department of Economics, Copperbelt University, Kitwe, Zambia
  • Lincoln Daka Department of Economics, Copperbelt University, Kitwe, Zambia
  • Christopher Phiri Department of Economics, Copperbelt University, Kitwe, Zambia
  • Oliver Kaonga Department of Economics, University of Zambia, Lusaka, Zambia
  • Francis Chibwe Rural Electrification Authority, Lusaka, Zambia
  • Venkatesh Seshamani Department of Economics, University of Zambia, Lusaka, Zambia

Abstract

The paper examines whether a significant relationship exists between inflation and trade openness in Zambia over the period 1985 to 2015. We use the Toda-Yamamoto approach to Granger causality to test for a causal relationship between inflation and trade openness. The results establish a bi-directional causality between inflation and trade openness. Further, there exists a positive relationship between inflation and trade openness in Zambia. Our findings stress the importance for central banks to understand the consequences of international trade for domestic inflation.

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Published

2017-11-07

How to Cite

Zombe, C., Daka, L., Phiri, C., Kaonga, O., Chibwe, F., & Seshamani, V. (2017). Investigating the Causal Relationship between Inflation and Trade Openness using Toda–Yamamoto Approach: Evidence from Zambia. Mediterranean Journal of Social Sciences, 8(6), 171. Retrieved from https://www.richtmann.org/journal/index.php/mjss/article/view/10120