ANALYZING THE IMPACT OF TRADE OPENNESS ON INFLATION:A TIME SERIES STUDY FOR UZBEKISTAN

Abstract

Inflation plays an essential role in the economy and can create an uncertain situation affecting economic growth; inflation has always been a critical issue for policymakers. Researchers have paid close attention to the relationship between trade openness and inflation; however, this relationship is not well-established in the literature. The current study examined Uzbekistan's time series data to determine the impact of trade openness on inflation. According to the study's findings, overall trade openness increases inflation. Still, the picture becomes more apparent when trade openness is broken down into exports and imports: export openness is responsible for limiting inflation, whereas import openness causes inflation. Furthermore, economic growth contributes to increasing inflation in Uzbekistan. It is suggested that policymakers increase domestic production for Uzbekistan to export more and reduce inflation.