Threshold Relationships among Inflation, Financial Market Development and Growth
AbstractThis paper tests for and estimates non-dynamic panel threshold relationships among inflation, financial market development and growth, where the relationship changes once a threshold level of inflation is reached. Robust statistical support of a single threshold value of inflation (about 14%) is found for this trivariate relationship. A strong positive relationship between growth and financial market development occurs before the threshold, and a strong negative relationship between growth and inflation occurs after the threshold. When an interaction variable between inflation and financial market development is introduced, the relationship between growth and inflation is significantly negative only before the threshold.
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Bibliographic InfoPaper provided by University of Adelaide, School of Economics in its series School of Economics Working Papers with number 2000-04.
Length: 32 pages
Date of creation: 2000
Date of revision:
thresholds; growth; financial markets; inflation; panel methods;
Find related papers by JEL classification:
- C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- G2 - Financial Economics - - Financial Institutions and Services
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