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On the impact of inflation on output growth: Does the level of inflation matter?

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  • López-Villavicencio, Antonia
  • Mignon, Valérie

Abstract

This paper investigates the growth effects of inflation on a wide sample of countries, including both industrialized and emerging economies. Relying upon the estimation of smooth transition and dynamic GMM models for panel data, our findings offer strong evidence that inflation non-linearly impacts economic growth. More specifically, there exists a threshold beyond which inflation exerts a negative effect on growth, and below which it is growth enhancing for advanced countries.

Suggested Citation

  • López-Villavicencio, Antonia & Mignon, Valérie, 2011. "On the impact of inflation on output growth: Does the level of inflation matter?," Journal of Macroeconomics, Elsevier, vol. 33(3), pages 455-464, September.
    • Handle: RePEc:eee:jmacro:v:33:y:2011:i:3:p:455-464
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