Does inflation lower productivity? Time series evidence on the impact of inflation on labor productivity in 12 OECD nations
According to proponents of zero-inflation policies, even low rates of inflation create distortions in capital allocation and in price signals, which result in lower rates of productivity growth. This paper tests the hypothesis that inflation has a causal impact (in the Granger sense) on labor productivity growth in manufacturing for 12 countries of the Organization for Economic Cooperation and Development (OECD). In bivariate tests of inflation and productivity and in multivariate tests using controls for cyclical effects, there is no evidence of a consistent relationship between inflation and productivity growth with regard to either sign or magnitude. Therefore, the present analysis does not support the view that further reductions in inflation from already low single-digit levels would have a positive impact on labor productivity growth for major industrial countries. Copyright International Atlantic Economic Society 2000
Volume (Year): 28 (2000)
Issue (Month): 3 (September)
|Contact details of provider:|| Postal: Suite 650, International Tower, 229 Peachtree Street, N.E., Atlanta, GA 30303|
Phone: (404) 965-1555
Fax: (404) 965-1556
Web page: http://springerlink.metapress.com/link.asp?id=112055
More information through EDIRC
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.:
- Martin Feldstein, 1980.
"Inflation, Tax Rules, and Investment: Some Econometric Evidence,"
NBER Working Papers
0577, National Bureau of Economic Research, Inc.
- Feldstein, Martin, 1982. "Inflation, Tax Rules and Investment: Some Econometric Evidence," Econometrica, Econometric Society, vol. 50(4), pages 825-62, July.
- Martin Feldstein, 1983. "Inflation, Tax Rules, and Investment: Some Econometric Evidence," NBER Chapters, in: Inflation, Tax Rules, and Capital Formation, pages 243-286 National Bureau of Economic Research, Inc.
- Norman Cameron & Derek Hum & Wayne Simpson, 1996. "Stylized Facts and Stylized Illusions: Inflation and Productivity Revisited," Canadian Journal of Economics, Canadian Economics Association, vol. 29(1), pages 152-62, February.
- Kenneth D. West, 1987.
"On the Interpretation of Near Random-Walk Behavior in GNP,"
NBER Working Papers
2364, National Bureau of Economic Research, Inc.
- West, Kenneth D, 1988. "On the Interpretation of Near Random-walk Behavior in GNP," American Economic Review, American Economic Association, vol. 78(1), pages 202-09, March.
- Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x, March.
- Donald Freeman & David Yerger, 1997. "Inflation and total factor productivity in Germany: A response to Smyth," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 133(1), pages 158-163, March.
- Daniel L. Thornton, 1996. "The costs and benefits of price stability: an assessment of Howitt's rule," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 23-38.
- Ram, Rati, 1984. "Causal Ordering across Inflation and Productivity Growth in the Post-war United States," The Review of Economics and Statistics, MIT Press, vol. 66(3), pages 472-77, August.
- Argia M. Sbordone & Kenneth N. Kuttner, 1994. "Does inflation reduce productivity?," Economic Perspectives, Federal Reserve Bank of Chicago, issue Nov, pages 2-14.
- Clark, Peter K, 1982. "Inflation and the Productivity Decline," American Economic Review, American Economic Association, vol. 72(2), pages 149-54, May.
When requesting a correction, please mention this item's handle: RePEc:kap:atlecj:v:28:y:2000:i:3:p:315-332. 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: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.