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Inflation and Growth: New Evidence From a Dynamic Panel Threshold Analysis

Stephanie Kremer, Alexander Bick and Dieter Nautz ()

No SFB649DP2009-036, SFB 649 Discussion Papers from Humboldt University, Collaborative Research Center 649

Abstract: We introduce a dynamic panel threshold model to shed new light on the impact of inflation on long-term economic growth. The empirical analysis is based on a large panel-data set including 124 countries during the period from 1950 to 2004. For industrialized countries, our results confirm the inflation targets of about 2% set by many central banks. For non-industrialized countries, we estimate that inflation hampers growth if it exceeds 17%. Below this threshold, however, the impact of inflation on growth remains insignificant. Therefore, our results do not support growth-enhancing effects of inflation in developing countries.

Keywords: Inflation Thresholds; Inflation and Growth; Dynamic Panel Threshold Model (search for similar items in EconPapers)
JEL-codes: E31 C23 O40 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2009-07
New Economics Papers: this item is included in nep-cba, nep-fdg, nep-mac and nep-mon
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Related works:
Journal Article: Inflation and growth: new evidence from a dynamic panel threshold analysis (2013) Downloads
Working Paper: Inflation and growth: new evidence from a dynamic panel threshold analysis (2009) Downloads
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