Inflation and economic growth: a cross-country nonlinear analysis
This paper presents new nonlinear regression estimates of the relationship between inflation and economic growth for 80 countries over the 1961- 2000 period, using middle-income and low-income countries. We also consider the four separate decades between 1961 and 2000. The paper consistently finds that higher inflation is associated with moderate gains in gross domestic product growth up to a roughly 15-18 percent inflation threshold. However, the findings diverge when we divide our full data set according to income levels. With the groupings by decade, the results indicate that inflation and growth will be more highly correlated to the degree that macroeconomic policy is focused on demand management as a stimulus to growth. We consider the implications of these findings for the conduct of monetary policy. One conclusion is that there is no justification for inflation-targeting policies as they are currently being practiced throughout the middle- and low-income countries, that is, to maintain inflation with a 3-5 percent band.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 28 (2006)
Issue (Month): 4 (July)
|Contact details of provider:|| Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=109348|
When requesting a correction, please mention this item's handle: RePEc:mes:postke:v:28:y:2006:i:4:p:593-614. 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: (Chris Nguyen)
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.