Inflation and growth: new evidence from a dynamic panel threshold analysis

Stephanie Kremer, Alexander Bick and Dieter Nautz

No 2009/9, Discussion Papers from Free University Berlin, School of Business & Economics

Abstract: 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.

Keywords: Inflation Thresholds; Inflation and Growth; Dynamic Panel Threshold Model (search for similar items in EconPapers)
JEL-codes: C23 E31 O40 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-cba, nep-fdg, nep-mac and nep-mon
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Citations: View citations in EconPapers (38)

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Journal Article: Inflation and growth: new evidence from a dynamic panel threshold analysis (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:fubsbe:20099

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