Monetary policy, banking, and growth
There is ample empirical evidence suggesting that countries with high inflation tend to grow slower than countries with low inflation. Based on the regression evidence, the inflation-rate effect is fairly large; on average, per-capita real GDP grows between $71 and $76 percentage points slower in a country in which the average inflation rate is 10 percent as compared with a country in which inflation is 0 percent. The purpose of this paper is to determine whether a model economy that is reasonably calibrated can account for such large inflation-rate effects. The answer is yes. Copyright 1998 by Oxford University Press.
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