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Inflation and Growth: Some Theory and Evidence

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Author Info
Max Gillman (Central European University, Department of Economics)
Mark Harris (Melbourne Institute of Applied Economic and Social Research, the University of Melbourne)
László Mátyás (Central European University, Department of Economics)

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Abstract

The paper presents a monetary model of endogenous growth and specifies an econometric model consistent with it. The economic model suggests a negative inflation-growth effect, and one that is stronger at lower levels of inflation. Empirical evaluation of the model is based on a large panel of OECD and APEC member countries over the years 1961-1997. The hypothesized negative inflation effect is found comprehensively for the OECD countries to be significant and, as in the theory, to increase marginally as the inflation rate falls. For APEC countries, the results from using instrumental variables also show significant evidence of a similar behavior.

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Publisher Info
Paper provided by International Conferences on Panel Data in its series 10th International Conference on Panel Data, Berlin, July 5-6, 2002 with number D5-1.

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Date of creation: Mar 2002
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Handle: RePEc:cpd:pd2002:d5-1

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Related research
Keywords: Endogenous Growth; Panel Data; Inflation; Non-linearity;

Find related papers by JEL classification:
O42 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical

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    Other versions:
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    Other versions:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Charemza, Wojciech & Makarova, Svetlana, 2009. "Nonlinear Inflationary Persistence and Growth: Theory and Empirical Comparative Analysis," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 6(2), pages 5-22, June. [Downloadable!]
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