Advanced Search
MyIDEAS: Login to save this paper or follow this series

Non-linearities in Inflation-Growth Nexus in the SADC Region: A Panel Smooth Transition Regression Approach

Contents:

Author Info

  • Monaheng Seleteng

    ()
    (Department of Economics, University of Pretoria)

  • Manoel Bittencourt

    ()
    (Department of Economics, University of Pretoria)

  • Renee van Eyden

    ()
    (Department of Economics, University of Pretoria)

Abstract

The main objective of central banks around the world is the achievement and maintenance of price stability, which actually creates an environment conducive for faster economic growth. Therefore, it is important for policy makers to understand the relationship between inflation and economic growth in order to make sound policies. If inflation is detrimental to economic growth, then policy makers should aim for low rate of inflation. This leads to a question; how low should the inflation rate be? Previous research in the non-linearities of the inflation-growth relationship has found that a positive relationship exists when inflation rate is low and a negative relationship exists when the inflation rate is high. This implies that there is a threshold level of inflation at which the sign switches. Therefore, this paper uses panel data for the period 1980 – 2008 to re-examine the inflation-growth nexus in the SADC region. In particular, the paper endogenously estimates the threshold level of inflation. To deal with the problems of endogeneity and heterogeneity, the paper uses the Panel Smooth Transition Regression (PSTR) method developed by González et al.(2005) and examines the non-linearities in the inflation-growth nexus. This technique further estimates the smoothness of the transition from low inflation regime to high inflation regime. The findings reveal a threshold level of 18.9 per cent, above which inflation is detrimental to economic growth in the SADC region.

Download Info

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Bibliographic Info

Paper provided by University of Pretoria, Department of Economics in its series Working Papers with number 201126.

as in new window
Length: 20 pages
Date of creation: Nov 2011
Date of revision:
Handle: RePEc:pre:wpaper:201126

Contact details of provider:
Postal: PRETORIA, 0002
Phone: (+2712) 420 2413
Fax: (+2712) 362-5207
Web page: http://web.up.ac.za/default.asp?ipkCategoryID=677
More information through EDIRC

Related research

Keywords: Economic Growth; Inflation; Threshold level; Non-linearities; PSTR Model;

Other versions of this item:

Find related papers by JEL classification:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Manoel Bittencourt, Renee van Eyden and Monaheng Seleteng, 2014. "Inflation and Economic Growth in the SADC: Some Panel Time-Series Evidence," Working Papers, Economic Research Southern Africa 404, Economic Research Southern Africa.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pre:wpaper:201126. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rangan Gupta).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.