Growth is not correlated with Inflation

Walter Stanners ()

Macroeconomics from EconWPA

Abstract: A paper by W. R. J. Alexander concluded, on the basis of econometric analysis involving variables additional to the two principal ones, that a decrease in inflation rate would result in a significant gain in the growth rate of national output. This note shows that this verbal conclusion does not follow from the results of the algebraic analysis which precedes it, and more generally, that time-series analysis, with or without additional variables, is unlikely to be able to contradict the conclusion of simple two-parameter cross-section correlation studies - namely that the growth rates of countries are not correlated with their inflation rates.

Keywords: growth; inflation; hyperinflation; correlation; cause (search for similar items in EconPapers)
JEL-codes: E (search for similar items in EconPapers)
Date: Written
Note: Type of Document - Word document; prepared on IBM PC; to print on HP 540; pages: 9 ; figures: None. None

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