Non Linearity In The Inflation Growth Relationship In Developing Economies

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Non Linearity In The Inflation Growth Relationship In Developing Economies

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Author : Deniz Baglan
language : en
Publisher:
Release Date : 2014

Non Linearity In The Inflation Growth Relationship In Developing Economies written by Deniz Baglan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.

Nonlinear Relation Between Inflation And Growth Panel Data Analysis

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Author : Anna Miller
language : en
Publisher: GRIN Verlag
Release Date : 2013-10-24

Nonlinear Relation Between Inflation And Growth Panel Data Analysis written by Anna Miller and has been published by GRIN Verlag this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-10-24 with Business & Economics categories.

Master's Thesis from the year 2013 in the subject Economics - Economic Cycle and Growth, grade: 64%, University of Nottingham, language: English, abstract: This paper examines the inflation-growth interaction for different country groups with similar national incomes for the period 1970-2011. It could be confirmed that this relation is strictly nonlinear with a threshold level of inflation of 3% for high-income countries and 13% for low-income countries. Although this result is in line with previous empirical studies based on a similar data set, much smaller samples needed to be used to obtain these results. Inflation threshold levels are estimated using the iteration method and different panel-specific techniques. Strongly significant thresholds were yielded only when controlling for country-fixed effects. Policymakers can use the findings for high-income or industrialised countries as a guide for inflation targeting, however more precise analyses for less advanced countries are needed in order to be useful for monetary policy.

Estimating The Inflation Growth Nexus A Smooth Transition Model

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Author : Mr.Raphael A. Espinoza
language : en
Publisher: International Monetary Fund
Release Date : 2010-03-01

Estimating The Inflation Growth Nexus A Smooth Transition Model written by Mr.Raphael A. Espinoza and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-03-01 with Business & Economics categories.

Motivated by the global inflation episode of 2007-08 and concern that high levels of inflation could undermine growth, this paper uses a panel of 165 countries and data for 1960-2007 to revisit the nexus between inflation and growth. We use a smooth transition model to investigate the speed at which inflation beyond a threshold becomes harmful to growth, an important consideration in the policy response to rising inflation as the world economy recovers. We estimate that for all country groups (except for advanced countries) inflation above a threshold of about 10 percent quickly becomes harmful to growth, suggesting the need for a prompt policy response to inflation at or above the relevant threshold. For the advanced economies, the threshold is much lower. For oil exporting countries, the estimates are less robust, possibly reflecting heterogeneity among oil producers, but the effect of higher inflation for oil producers is found to be stronger.

Nonlinear Effects Of Inflationon Economic Growth

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Author : Mr.Michael Sarel
language : en
Publisher: International Monetary Fund
Release Date : 1995-06-01

Nonlinear Effects Of Inflationon Economic Growth written by Mr.Michael Sarel and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1995-06-01 with Business & Economics categories.

This paper examines the possibility of nonlinear effects of inflation on economic growth. It finds evidence of a significant structural break in the function that relates economic growth to inflation. The break is estimated to occur when the inflation rate is 8 percent. Below that rate, inflation does not have any effect on growth, or it may even have a slightly positive effect. When the inflation rate is above 8 percent, however, the estimated effect of inflation on growth rates is significant, robust and extremely powerful. The paper also demonstrates that when the existence of the structural break is ignored, the estimated effect of inflation on growth is biased by a factor of three.

Threshold Effects In The Relationship Between Inflation And Growth

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Author : Anna Miller
language : en
Publisher: GRIN Verlag
Release Date : 2013-10-23

Threshold Effects In The Relationship Between Inflation And Growth written by Anna Miller and has been published by GRIN Verlag this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-10-23 with Business & Economics categories.

Essay from the year 2013 in the subject Business economics - Operations Research, grade: 73%, University of Nottingham, language: English, abstract: Up to the 1970s it was mostly observed that inflation does not have a significant effect on growth, or that the effect was even slightly positive (Sarel 1996). However, due to the following decades of high and persistent inflation in many countries1, the available data showed changes in the inflation-growth nexus. It was univocally confirmed that inflation has a negative impact on growth, and macroeconomic policies are aiming to spur growth by keeping inflation at low levels. This having said, intuitively the question arises, how low should the target inflation be? Or, which is the threshold level of inflation between a positive and negative impact on growth? Many authors in the 1990s attempted to solve this question, with fairly divers results. Sarel (1996) analysed a panel of 87 countries over the period 1970 to 1990 using OLS estimation. He finds a structural break at an average annual rate of inflation of 8%. Below this level, inflation has no significant effect on growth, but for inflation levels above 8%, growth is significantly and strongly negatively affected. Gosh and Phillips (1998) find a much lower threshold at 2.5%, and Christoffersen and Doyle (1998), applying Sarel’s methodology on transient countries between 1990-1996, obtain a threshold of 13%. Bruno and Easterly’s (1998) results are somewhat striking. Their analysis is based on a sample of 31 countries that experienced high-inflation episodes over the period 1961-1994, and results in the fact that inflation does not have a significant effect on growth for normal levels, however the relationship becomes negative with high-frequency data and highinflation observations of 40% or higher.Motivated by this variety of results, Khan and Senhadji re-examined this issue in their 2001 paper “Threshold Effects in the Relationship Between Inflation and Growth”. They contribute to existing work by extending and modifying their analysis compared to previous literature by, first, looking separately on developing and industrialized countries, and second, by applying new econometric methods, which include the non-linear least squares (NLLS) estimation combined with a hybrid function of inflation, where the threshold level is found with conditional least squares. Furthermore, Khan and Senhadji (2001) use the bootstrap method, proposed by Hansen (1999), in order to test for statistical significance of the threshold effect. Accordingly, their results differ in so far from previous work as the threshold...

Threshold Effects Of Inflation On Economic Growth In Selected African Regional Economic Communities Evidence From A Dynamic Panel Threshold Modeling

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Author : Arcade Ndoricimpa
language : en
Publisher: Litres
Release Date : 2022-01-29

Threshold Effects Of Inflation On Economic Growth In Selected African Regional Economic Communities Evidence From A Dynamic Panel Threshold Modeling written by Arcade Ndoricimpa and has been published by Litres this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022-01-29 with Business & Economics categories.

The objective of this study is to estimate inflation threshold and examine its impact on the inflation-growth nexus in selected African regional economic communities. While a number of empirical studies exist in this area for developing countries, they bundle up countries from Asia, Africa and Latin America which do not have the same inflation experiences. This study therefore focuses on Africa. However, since African regional groupings themselves have different inflation experiences, non-linearity in the relationship between inflation and growth is explored within each grouping separately. The study uses dynamic panel threshold modeling recently suggested by Kremer et al. (2013) which extends the non-dynamic panel threshold model of Hansen (1999) and the cross-sectional threshold model of Caner and Hansen (2004). The results indicate that the estimated inflation threshold is different across the regional economic communities. Nonlinearity in inflation-growth nexus seems to hold in CEMAC, COMESA and SADC while it is questioned in WAEMU and WAMZ. For CEMAC, COMESA and SADC, the findings indicate that inflation above the threshold is harmful to growth. Some correlations are established in this study but further analysis is needed to suggest a policy.

Does Inflation Slow Long Run Growth In India

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Author : Mr.Kamiar Mohaddes
language : en
Publisher: International Monetary Fund
Release Date : 2014-12-15

Does Inflation Slow Long Run Growth In India written by Mr.Kamiar Mohaddes and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-12-15 with Business & Economics categories.

This paper examines the long-run relationship between consumer price index industrial workers (CPI-IW) inflation and GDP growth in India. We collect data on a sample of 14 Indian states over the period 1989–2013, and use the cross-sectionally augmented distributed lag (CSDL) approach of Chudik et al. (2013) as well as the standard panel ARDL method for estimation—to account for cross-state heterogeneity and dependence, dynamics and feedback effects. Our findings suggest that, on average, there is a negative long-run relationship between inflation and economic growth in India. We also find statistically-significant inflation-growth threshold effects in the case of states with persistently-elevated inflation rates of above 5.5 percent. This suggest the need for the Reserve Bank of India to balance the short-term growthinflation trade-off, in light of the long-term negative effects on growth of persistently-high inflation.

Analysis Of Economic Growth Inflation

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Author : Raymond Cook
language : en
Publisher: GRIN Verlag
Release Date : 2013-06-05

Analysis Of Economic Growth Inflation written by Raymond Cook and has been published by GRIN Verlag this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-06-05 with Business & Economics categories.

Research Paper (postgraduate) from the year 2011 in the subject Economics - Finance, grade: A, University of Newcastle, language: English, abstract: During the past two decades, China’s economy has been growing rapidly, so has the inflation rate. This research focuses on the relationship between China’s inflation rate and economic growth. There are three sub-questions, consisting of whether there is a significant correlation between China’s inflation and economic growth, whether there is a cause-and-effect relationship between China’s inflation and economic growth, and how time factor influences their relationship. The result will be helpful for the government to find a way in order to achieve high economic growth and low inflation. After reviewing empirical literature, we know that as the dada and methods differ, different researchers have generated different conclusions regarding the relationship between inflation and economic growth. In this research, we use CPI to measure inflation rate and GDP growth rate to measure economic growth rate. All the data are collected from the National Bureau of Statistics of China. We use three methods to analyse data, including the Correlation Coefficient test, the Granger Causality test as well as the VAR model analysis. The result turns out to be that there is a bidirectional causality relationship between inflation and economy growth, but the relationship is not so strong because CPI is not solely driven by GDP. At last, we have come up with three recommendations: firstly, change their model of economic development; secondly, use the monetary policies; thirdly, monitor and predict people’s expectation of inflation.

The Nonlinear Relationship Between Public Debt And Sovereign Credit Ratings

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Author : Metodij Hadzi-Vaskov
language : en
Publisher: International Monetary Fund
Release Date : 2019-07-26

The Nonlinear Relationship Between Public Debt And Sovereign Credit Ratings written by Metodij Hadzi-Vaskov and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-07-26 with Business & Economics categories.

This study investigates the nonlinear relationship between public debt and sovereign credit ratings, using a wide sample of over one hundred advanced, emerging, and developing economies. It finds that: i) higher public debt lowers the probability of being placed in a higher rating category; ii) the negative debt-ratings relationship is nonlinear and depends on the rating grade itself; and iii) the identified nonlinearity explains the differential impact of debt on ratings in advanced economies versus in emerging markets and developing economies. These results hold for both gross debt and net debt, and are robust to alternative dependent variable definitions, analytical techniques, and empirical specifications. These findings underscore the potential for fiscal consolidation in helping countries achieve a better credit rating.

Nonlinearities Between Financial Development And Economic Development

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Author : Shadab Qaiser
language : en
Publisher:
Release Date : 2010

Nonlinearities Between Financial Development And Economic Development written by Shadab Qaiser and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with categories.