Inflation and growth: new evidence from a dynamic panel threshold analysis
We introduce a dynamic panel threshold model to shed new light on the impact of inflation on long-term economic growth. The empirical analysis is based on a large panel-data set including 124 countries during the period from 1950 to 2004. 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 hampers growth if it exceeds 17%. Below this threshold, however, the impact of inflation on growth remains insignificant. Therefore, our results do not support growth-enhancing effects of inflation in developing countries.
|Date of creation:||2009|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (030) 838 2272
Fax: (030) 838 2129
Web page: http://www.wiwiss.fu-berlin.de/en/index.html
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.:
- Neil Foster, 2006. "Exports, growth and threshold effects in Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 42(6), pages 1056-1074.
- Levine, Ross & Renelt, David, 1991.
"A sensitivity analysis of cross-country growth regressions,"
Policy Research Working Paper Series
609, The World Bank.
- 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.
- repec:chb:bcchwp:03 is not listed on IDEAS
- Sala-i-Martin, Xavier, 1997.
"I Just Ran Two Million Regressions,"
American Economic Review,
American Economic Association, vol. 87(2), pages 178-83, May.
- 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.
- David Roodman, 2009.
"A Note on the Theme of Too Many Instruments,"
Oxford Bulletin of Economics and Statistics,
Department of Economics, University of Oxford, vol. 71(1), pages 135-158, 02.
- 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.
- Vaona, Andrea, 2012.
"Inflation And Growth In The Long Run: A New Keynesian Theory And Further Semiparametric Evidence,"
Cambridge University Press, vol. 16(01), pages 94-132, February.
- Andrea Vaona, 2010. "Inflation and Growth in the Long Run: A New Keynesian Theory and Further Semiparametric Evidence," Working Papers 09/2010, University of Verona, Department of Economics.
- 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.
- 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.
- 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.
- 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, 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.
- Bruno, Michael & Easterly, William, 1995.
"Inflation crises and long-run growth,"
Policy Research Working Paper Series
1517, The World Bank.
- 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.
- 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, 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, 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.
- A. Senhadji Semlali & Mohsin S. Khan, 2000.
"Threshold Effects in the Relationship Between Inflation and Growth,"
IMF Working Papers
00/110, International Monetary Fund.
- 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.
- 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.
- 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.
- 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.
- Bick, Alexander, 2010. "Threshold effects of inflation on economic growth in developing countries," Economics Letters, Elsevier, vol. 108(2), pages 126-129, August.
- 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.
- 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.
- 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.
- Khan, Mohsin S. & Senhadji, Abdelhak S. & Smith, Bruce D., 2006.
"Inflation And Financial Depth,"
Cambridge University Press, vol. 10(02), pages 165-182, April.
- 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.
When requesting a correction, please mention this item's handle: RePEc:zbw:fubsbe:20099. 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: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.