The effect of inflation on the natural rate of output: experimental evidence

Mary Bange, William Bernhard, Jim Granato and Lauren Jones

Applied Economics, 1997, vol. 29, issue 9, 1191-1199

Abstract: We examine the inflation-output relationship in the USA for the period 1955-90. We start by replicating Smyth (1992) and subjecting his estimates to a series of diagnostic tests. The model is shown to satisfy conditions for valid inference (weak exogeneity) and policy analysis (super-exogeneity) (Engle, Hendry and Richard, 1983). These robustness checks allow us to study the out-of-sample consequences of the point estimates for various levels of inflation. One central experimental result is that for inflation rates exceeding 4% the natural rate of output is reduced to such an extent that it contributes to a reduction in the growth rate of real GNP that is below historical trend (3.1% in our sample).

Date: 1997
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/00036849700000010 (text/html)
Access to full text is restricted to subscribers.

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: https://EconPapers.repec.org/RePEc:taf:applec:v:29:y:1997:i:9:p:1191-1199

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036849700000010

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().