Examining the Robustness of the Inflation and Growth Relationship
AbstractUsing Bayesian Model Averaging, we examine whether inflation's effects on economic growth are robust to model uncertainty across numerous specifications. Cross-sectional data provide little evidence of a robust inflation-growth relationship, even after allowing for non-linear effects. Panel data with fixed effects suggest inflation is one of the more robust variables affecting growth, and non-linear results suggest that high inflation observations drive the results. However, this robustness is lost when estimation is carried out with instrumental variables.
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Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 73 (2007)
Issue (Month): 4 (April)
Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- O42 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
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- Eggoh, Jude C. & Khan, Muhammad, 2014. "On the nonlinear relationship between inflation and economic growth," Research in Economics, Elsevier, vol. 68(2), pages 133-143.
- Stephanie Kremer & Alexander Bick & Dieter Nautz, 2009.
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SFB 649 Discussion Papers
SFB649DP2009-036, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
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