Nonparametric and semiparametric evidence on the long-run effects of inflation on growth

Andrea Vaona and Stefano Schiavo

No 520, Department of Economics Working Papers from Department of Economics, University of Trento, Italia

Abstract: Two major findings of the empirical literature on the connec tion between inflation and output growth is that their relationship is non linear and that there exists a threshold inflation level be low which inflation has a positive impact on growth and above which inflation has a negative impact on growth. In this paper we adopt both a nonparametric estimator and a semiparametric IV one to show that the first finding holds true even dropping the specification assumptions typical of parametric models. We also show that a threshold level does exist and it is around 12% for developed countries. Below this level inflation does not appear to have any substantial effect on growth.

Keywords: Inflation; Growth (search for similar items in EconPapers)
JEL-codes: C14 E31 O49 (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-cba and nep-mac
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Related works:
Journal Article: Nonparametric and semiparametric evidence on the long-run effects of inflation on growth (2007)
Working Paper: Nonparametric and semiparametric evidence on the long-run effects of inflation on growth (2007)
Working Paper: Nonparametric and semiparametric evidence on the long-run effects of inflation on growth (2007)
Working Paper: Nonparametric and semiparametric evidence on the long-run effects of inflation on growth (2006)
Working Paper: Nonparametric and semiparametric evidence on the long-run effects of inflation on growth (2006)
Working Paper: Nonparametric and semi-parametric evidence on the long-run effects of inflation on growth (2006)
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