Nonparametric and semiparametric evidence on the long-run effects of inflation on growth
AbstractTwo major findings of the empirical literature on the connec tion between inflation and output growth is that their relationship is non linear and that there exists a threshold inflation level be low which inflation has a positive impact on growth and above which inflation has a negative impact on growth. In this paper we adopt both a nonparametric estimator and a semiparametric IV one to show that the first finding holds true even dropping the specification assumptions typical of parametric models. We also show that a threshold level does exist and it is around 12% for developed countries. Below this level inflation does not appear to have any substantial effect on growth.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 94 (2007)
Issue (Month): 3 (March)
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Web page: http://www.elsevier.com/locate/ecolet
Other versions of this item:
- Andrea Vaona & Stefano Schiavo, 2006. "Nonparametric and Semiparametric Evidence on the Long-Run Effects of Inflation on Growth," Kiel Working Papers 1286, Kiel Institute for the World Economy.
- Andrea Vaona & Stefano Schiavo, 2005. "Nonparametric and semiparametric evidence on the long-run effects of inflation on growth," Department of Economics Working Papers 0520, Department of Economics, University of Trento, Italia.
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- O49 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
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