The Growth-Inflation Nexus for the US over 1801-2013: A Semiparametric Approach

Mehmet Balcilar, Rangan Gupta and Charl Jooste

No 15-17, Working Papers from Eastern Mediterranean University, Department of Economics

Abstract: We try and detect whether there exists a threshold level of inflation for the US economy over 1801-2013, beyond which it has a negative effect on economic growth. We use a combination of nonparametric (NP) and instrumental variable semiparametric (SNP-IV) methods to obtain inflation thresholds for the United States. The results suggest that the relationship between growth and inflation is hump shaped—that higher levels of inflation reduce growth more. Our results consistently show that inflation above two per cent negatively affects growth.

Keywords: Inflation; growth; nonparametric; semiparametric (search for similar items in EconPapers)
JEL-codes: C14 E31 O49 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2014
New Economics Papers: this item is included in nep-cba, nep-ger, nep-gro and nep-mac
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http://repec.economics.emu.edu.tr/RePEc/emu/wpaper/15-17.pdf First version, 2014 (application/pdf)

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Working Paper: The Growth-Inflation Nexus for the US over 1801-2013: A Semiparametric Approach (2014)
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