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Cyclical and causal patterns of inflation and GDP growth

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  • Mahmood Arai
  • Mats Kinnwall
  • Peter Skogman Thoursie

Abstract

Empirical foundations for the view that high inflation impairs GDP growth are examined using annual data for 115 countries over the period 1960-1995. Taking into account country heterogeneity and time-specific symmetric shocks, as well as endogeneity of inflation and dynamics of GDP growth, dynamic panel-data models of the effects of inflation on growth are estimated. No evidence is found supporting the view that inflation is in general harmful to GDP growth. On the other hand, there is a negative correlation between contemporaneous intra-country inflation and growth for periods characterized by positive oil-price shocks.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 36 (2004)
Issue (Month): 15 ()
Pages: 1705-1715

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Handle: RePEc:taf:applec:v:36:y:2004:i:15:p:1705-1715

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  1. Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996. " Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth, Springer, vol. 1(3), pages 363-89, September.
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Cited by:
  1. Athanasios Koulakiotis & Katerina Lyroudi & Nicholas Papasyriopoulos, 2012. "Inflation, GDP and Causality for European Countries," International Advances in Economic Research, Springer, vol. 18(1), pages 53-62, February.
  2. Alexandru Minea & Christophe Rault & Patrick Villieu, 2008. "Further Theoretical and Empirical Evidence on Money to Growth Relation," William Davidson Institute Working Papers Series wp909, William Davidson Institute at the University of Michigan.
  3. Huang, Bwo-Nung & Hwang, M.J. & Yang, C.W., 2008. "Causal relationship between energy consumption and GDP growth revisited: A dynamic panel data approach," Ecological Economics, Elsevier, vol. 67(1), pages 41-54, August.
  4. repec:ebl:ecbull:v:5:y:2008:i:21:p:1-7 is not listed on IDEAS

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