Warning: Inflation May Be Harmful to Your Growth

Atish Ghosh () and Steven Phillips
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Steven Phillips: International Monetary Fund

IMF Staff Papers, 1998, vol. 45, issue 4, 672-710

Abstract: While few doubt that very high inflation is bad for growth, there is less agreement about the effects of moderate inflation. Using panel regressions and allowing for a nonlinear specification, this paper finds a statistically and economically significant negative relationship between inflation and growth, which holds robustly at all but the lowest inflation rates. A "decision-tree" technique identifies inflation as one of the most important determinants of growth. Finally, short-run growth costs of disinflation are only relevant for the most severe disinflations, or when the initial inflation rate is well within the single-digit range.

JEL-codes: E31 (search for similar items in EconPapers)
Date: 1998
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Citations: View citations in EconPapers (192)

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Persistent link: https://EconPapers.repec.org/RePEc:pal:imfstp:v:45:y:1998:i:4:p:672-710

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