Cross-country Evidence on Long-Run Growth and Inflation

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Cross-country Evidence on Long-Run Growth and Inflation

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Clark, Todd E

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Todd Clark

Abstract

While inflation is generally inversely related to growth, the author shows that estimates of the relationship suffer two robustness problems which plague a variety of model specifications. First, growth-inflation results are highly sensitive to modifications to the country sample, limited from the start to low- and moderate-inflation countries. Second, results are also sensitive to modifications in the time period of analysis. In conjunction with the regression specification sensitivity documented by Ross Levine and David Renelt (1992), these results should further discourage the practice of quantifying inflation's effects with cross-country growth regressions. Copyright 1997 by Oxford University Press.

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Article provided by Oxford University Press in its journal Economic Inquiry.

Volume (Year): 35 (1997)
Issue (Month): 1 (January)
Pages: 70-81
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Handle: RePEc:oup:ecinqu:v:35:y:1997:i:1:p:70-81

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Paper
- Todd E. Clark, 1993. "Cross-country evidence on long run growth and inflation," Research Working Paper 93-05, Federal Reserve Bank of Kansas City.

Cited by:
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Georgios Bitros & Epaminondas Panas, 2005. "Another look at the inflation-productivity trade-off," Macroeconomics 0506001, EconWPA. [Downloadable!]
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Daniel L. Thornton, 1996. "The costs and benefits of price stability: an assessment of Howitt's rule," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 23-38. [Downloadable!]
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Athanasios Orphanides & Volker Wieland, 1999. "Inflation zone targetting," Working Paper Series 8, European Central Bank. [Downloadable!]
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O'Reilly, B., 1998. "The Benefits of Low Inflation: Taking Shock "A nickel ain't worth a dime any more" [Yogi Berra]," Technical Reports 83, Bank of Canada. [Downloadable!]
Shu-Hua Chen & Jang-Ting Guo, 2008. "On the growth and velocity effects of money," Economics Bulletin, Economics Bulletin, vol. 5(13), pages 1-7. [Downloadable!]
George C. Bitros & Epameinondas E. Panas, 2005. "The inflation-productivity trade-off revisited," Macroeconomics 0512012, EconWPA. [Downloadable!]
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R. I. Udegbunam, 2002. "Openness, Stock Market Development, and Industrial Growth in Nigeria," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 41(1), pages 69-92. [Downloadable!]

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