Inflation and growth: new evidence from a dynamic panel threshold analysis
We introduce a dynamic panel threshold model to estimate inflation thresholds for long-term economic growth. Advancing on Hansen (J Econom 93:345–368, 1999 ) and Caner and Hansen (Econom Theory 20:813–843, 2004 ), our model allows the estimation of threshold effects with panel data even in case of endogenous regressors. The empirical analysis is based on a large panel-dataset including 124 countries. For industrialized countries, our results confirm the inflation targets of about 2% set by many central banks. For non-industrialized countries, we estimate that inflation rates exceeding 17% are associated with lower economic growth. Below this threshold, however, the correlation remains insignificant. Copyright Springer-Verlag 2013
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): 44 (2013)
Issue (Month): 2 (April)
|Contact details of provider:|| Web page: http://www.springer.com|
|Order Information:||Web: http://www.springer.com/economics/econometrics/journal/181/PS2|
References listed on IDEAS
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.:
- Vaona, Andrea & Schiavo, Stefano, 2006.
"Nonparametric and semi-parametric evidence on the long-run effects of inflation on growth,"
Kiel Working Papers
1286, Kiel Institute for the World Economy (IfW).
- Vaona, A. & Schiavo, S., 2007. "Nonparametric and semiparametric evidence on the long-run effects of inflation on growth," Economics Letters, Elsevier, vol. 94(3), pages 452-458, March.
- Andrea Vaona & Stefano Schiavo, 2005. "Nonparametric and semiparametric evidence on the long-run effects of inflation on growth," Department of Economics Working Papers 0520, Department of Economics, University of Trento, Italia.
- Andrea Vaona & Stefano Schiavo, 2006. "Nonparametric and Semiparametric Evidence on the Long-Run Effects of Inflation on Growth," Kiel Working Papers 1286, Kiel Institute for the World Economy.
- Andrea Vaona & Stefano Schiavo, 2006. "Nonparametric and semiparametric evidence on the long-run effects of inflation on growth," Sciences Po publications No. 1286, Sciences Po.
- Andrea Vaona & Stefano Schiavo, 2006. "Nonparametric and semiparametric evidence on the long-run effects of inflation on growth," Working Papers hal-01065641, HAL.
- Bruno, Michael & Easterly, William, 1998.
"Inflation crises and long-run growth,"
Journal of Monetary Economics,
Elsevier, vol. 41(1), pages 3-26, February.
- Hansen, Bruce E., 1999.
"Threshold effects in non-dynamic panels: Estimation, testing, and inference,"
Journal of Econometrics,
Elsevier, vol. 93(2), pages 345-368, December.
- Tom Doan, . "PANELTHRESH: RATS procedure to analyze up to two threshold breaks in a fixed effects panel model," Statistical Software Components RTS00152, Boston College Department of Economics.
- Tom Doan, . "RATS programs to replicate Hansen's example of threshold break in panel data," Statistical Software Components RTZ00088, Boston College Department of Economics.
- Bruce E. Hansen, 1997. "Threshold effects in non-dynamic panels: Estimation, testing and inference," Boston College Working Papers in Economics 365, Boston College Department of Economics.
- Mohsin S. Khan & Abdelhak S Senhadji & Bruce D. Smith, 2001.
"Inflation and Financial Depth,"
IMF Working Papers
01/44, International Monetary Fund.
- Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996.
"Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics,"
Journal of Economic Growth,
Springer, vol. 1(3), pages 363-89, September.
- Francesco Caselli & Gerardo Esquivel & Fernando Lefort, 1997. "Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Working Papers Central Bank of Chile 03, Central Bank of Chile.
- Bick, Alexander, 2010. "Threshold effects of inflation on economic growth in developing countries," Economics Letters, Elsevier, vol. 108(2), pages 126-129, August.
- Richard C.K. Burdekin & Arthur T. Denzau & Manfred W. Keil & Thitithep Sitthiyot & Thomas D. Willett, .
"When Does Inflation Hurt Economic Growth? Different Nonlinearities for Different Economies,"
Claremont Colleges Working Papers
2000-22, Claremont Colleges.
- Burdekin, Richard C.K. & Denzau, Arthur T. & Keil, Manfred W. & Sitthiyot, Thitithep & Willett, Thomas D., 2004. "When does inflation hurt economic growth? Different nonlinearities for different economies," Journal of Macroeconomics, Elsevier, vol. 26(3), pages 519-532, September.
- By Mohsin S. Khan & Abdelhak S. Senhadji, 2001.
"Threshold Effects in the Relationship Between Inflation and Growth,"
IMF Staff Papers,
Palgrave Macmillan, vol. 48(1), pages 1.
- Abdelhak S Senhadji & Mohsin S. Khan, 2000. "Threshold Effects in the Relationship Between Inflation and Growth," IMF Working Papers 00/110, International Monetary Fund.
- Levine, Ross & Renelt, David, 1992.
"A Sensitivity Analysis of Cross-Country Growth Regressions,"
American Economic Review,
American Economic Association, vol. 82(4), pages 942-63, September.
- Levine, Ross & Renelt, David, 1991. "A sensitivity analysis of cross-country growth regressions," Policy Research Working Paper Series 609, The World Bank.
- Caner, Mehmet & Hansen, Bruce E., 2004. "Instrumental Variable Estimation Of A Threshold Model," Econometric Theory, Cambridge University Press, vol. 20(05), pages 813-843, October.
- Xavier Sala-i-Martin, 1997.
"I just ran four million regressions,"
Economics Working Papers
201, Department of Economics and Business, Universitat Pompeu Fabra.
- David, Drukker & Pedro, Gomis-Porqueras & Paula, Hernandez -erme, 2005. "Threshold effects in the relationship between inflation and growth: a new panel-data approach," MPRA Paper 38225, University Library of Munich, Germany.
- Alexander Bick & Dieter Nautz, 2008. "Inflation Thresholds and Relative Price Variability: Evidence from U.S. Cities," International Journal of Central Banking, International Journal of Central Banking, vol. 4(3), pages 61-76, September.
- M Arellano & O Bover, 1990.
"Another Look at the Instrumental Variable Estimation of Error-Components Models,"
CEP Discussion Papers
dp0007, Centre for Economic Performance, LSE.
- Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
- Andrea Vaona, 2010.
"Inflation and Growth in the Long Run: A New Keynesian Theory and Further Semiparametric Evidence,"
09/2010, University of Verona, Department of Economics.
- Vaona, Andrea, 2012. "Inflation And Growth In The Long Run: A New Keynesian Theory And Further Semiparametric Evidence," Macroeconomic Dynamics, Cambridge University Press, vol. 16(01), pages 94-132, February.
- Goncalves, Carlos Eduardo S. & Salles, Joao M., 2008. "Inflation targeting in emerging economies: What do the data say?," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 312-318, February.
- David R. Hineline, 2007. "Examining the Robustness of the Inflation and Growth Relationship," Southern Economic Journal, Southern Economic Association, vol. 73(4), pages 1020–1037, April.
- Temple, Jonathan, 2000. " Inflation and Growth: Stories Short and Tall," Journal of Economic Surveys, Wiley Blackwell, vol. 14(4), pages 395-426, September.
- Atish Ghosh & Steven Phillips, 1998. "Warning: Inflation May Be Harmful to Your Growth," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 672-710, December.
- David Roodman, 2007.
"A Note on the Theme of Too Many Instruments,"
125, Center for Global Development.
- Bruce E. Hansen, 1996.
"Sample Splitting and Threshold Estimation,"
Boston College Working Papers in Economics
319., Boston College Department of Economics, revised 12 May 1998.
- Omay, Tolga & Öznur Kan, Elif, 2010. "Re-examining the threshold effects in the inflation-growth nexus with cross-sectionally dependent non-linear panel: Evidence from six industrialized economies," Economic Modelling, Elsevier, vol. 27(5), pages 996-1005, September.
- Lin, Shu & Ye, Haichun, 2009. "Does inflation targeting make a difference in developing countries?," Journal of Development Economics, Elsevier, vol. 89(1), pages 118-123, May.
- Neil Foster, 2006. "Exports, growth and threshold effects in Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 42(6), pages 1056-1074.
When requesting a correction, please mention this item's handle: RePEc:spr:empeco:v:44:y:2013:i:2:p:861-878. 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 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.