Reexamining the relationship between inflation and growth: Do institutions matter in developing countries?
Raul Ibarra and
Danilo Trupkin ()
Economic Modelling, 2016, vol. 52, issue PB, 332-351
Using a large panel of countries during the period 1950–2009, we estimate the inflation thresholds above which its association with economic growth is expected to be negative, taking into account differences in institutions across countries. First, in line with previous literature, we find that the estimated threshold is substantially higher for developing countries compared to that of developed countries. However, we further show that the inflation threshold in developing economies falls when we consider reduced groups that exceed certain levels of institutional quality. We also find that the cost of inflation increases with the quality of institutions.
Keywords: Inflation; Economic growth; Threshold effects; Institutions (search for similar items in EconPapers)
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Working Paper: The Relationship between Inflation and Growth. A Panel Smooth Transition Regression Approach for Developed and Developing Countries (2011)
Working Paper: The Relationship between Inflation and Growth:A Panel Smooth Transition Regression Approach for Developed and Developing Countries (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:52:y:2016:i:pb:p:332-351
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