Studies of openness on inflation using fixed effect least squares and quantile regression

The correlation between openness and inflation has been generally posed as a negative relationship. Since Romer (1993) first proposed his study, under the guise that the absence of precommitment to monetary expansion can lead to higher inflation, many other studies and regressions have been done, attributing the effects to different causes or under special circumstances. Terra (1998) argued that the negative results were due to severely indebted countries in the 1980s, resulting in largely different magnitudes during different periods. Alfaro (2005) incorporated Reinhart and Rogoff's (2004) measure of exchange rate regime and found a positive relationship. And recently, Lin (2010) incorporated Koenker's (2004) quantile regression method, accounting for effects of openness on different levels of inflation, resulting in positive and negative effects as well as significant and insignificant. In this study, all of the previous studies will be revisited and reassessed with averaging least squares, panel fixed effect models, and quantile regression spanning the relevant time periods and segmented time periods. In addition, regressions will be taken in fixed effect least squares and quantile regression to explore the effects of an alternative form of openness and the problem of using imports to lower inflation