Capital account liberalization and inflation

Evidence from over 100 countries suggests a strong link between capital account openness and lower inflation. In particular, widespread capital account liberalization during the early 1990s appears to have contributed to the world-wide disinflation observed during that decade. Alternative indices of capital account openness, including those of Quinn and Toyoda [Measuring International Financial Openness and Closure, Department of Political Science, Georgetown University, Washington, DC, 1996, mimeo] yield similar results.