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Cyclical and Causal Patterns of Inflation and GDP Growth

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  • Arai, Mahmood

    () (Dept. of Economics, Stockholm University)

  • Kinnwall, Mats

    () (Handelsbanken Markets)

  • Skogman Thoursie, Peter

    () (Dept. of Economics, Stockholm University)

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 we estimate dynamic panel-data models of the effects of inflation on growth. We find no evidence 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 characterised by positive oil-price shocks.

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Bibliographic Info

Paper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number 2002:5.

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Length: 25 pages
Date of creation: 08 Feb 2002
Date of revision:
Handle: RePEc:hhs:sunrpe:2002_0005

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Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden
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Web page: http://www.ne.su.se/
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Keywords: GDP GROWTH; Inflation;

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Cited by:
  1. Christophe Rault & Alexandru Minea & Patrick Villieu, 2008. "Further theoretical and empirical evidence on money to growth relation," Economics Bulletin, AccessEcon, vol. 28(13), pages A0.
  2. Alexandru Minea & Patrick Villieu & Christophe Rault, 2008. "Further theoretical and empirical evidence on money to growth relation," Economics Bulletin, AccessEcon, vol. 5(21), pages 1-7.
  3. 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.
  4. 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.

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