Economics at your fingertips  

Nonlinearity Relationship of Inflation and Economic Growth: Role of Institutions Quality

Thouraya Boujelbene ()
Additional contact information
Thouraya Boujelbene: Higher Institute of Business Administration of Sfax, University of Sfax

Journal for Economic Forecasting, 2021, issue 1, 166-179

Abstract: The inflation-growth nexus has drawn much interest in the modern contemporary economic literature, both theoretically and empirically across countries. A trade-off in this relationship was revealed to be crucial and the notion of an inflation threshold would be of great importance for the economic agents. The aim of this study, therefore, was to estimate an inflation threshold and examine its impact on the inflation - growth relationship in the North African countries during the period 1980–2016. This relationship was investigated by applying the Dynamic Panel Threshold Regression, taking into account some institutional variables, to capture the level of democracy and political instability. In line with several previous research works, our findings indicated that there is a nonlinear relationship between Consumer Price Index (CPI) inflation and the economic growth rate. They also showed that the CPI inflation, above a certain threshold, has a negative influence on economic growth, but has no effect below this level. In addition, these results proved that the cost of inflation increases with the quality of institutions; i.e., the effect of political instability and the level of democracy.

Keywords: CPI inflation; economic growth; quality of institutions; threshold level (search for similar items in EconPapers)
JEL-codes: E3 E6 O4 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Journal for Economic Forecasting is currently edited by Lucian Liviu Albu and Corina Saman

More articles in Journal for Economic Forecasting from Institute for Economic Forecasting Contact information at EDIRC.
Bibliographic data for series maintained by Corina Saman ().

Page updated 2022-04-06
Handle: RePEc:rjr:romjef:v::y:2021:i:1:p:166-179