Threshold Effects In The Relationship Between Inflation And Growth
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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 In The Relationship Between Inflation And Growth
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Author : Mohsin S. Khan
language : en
Publisher: International Monetary Fund
Release Date : 2000-06
Threshold Effects In The Relationship Between Inflation And Growth written by Mohsin S. Khan 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 2000-06 with Business & Economics categories.
This paper reexamines the issue of the existence of threshold effects in the relationship between inflation and growth, using new econometric techniques that provide appropriate procedures for estimation and inference. The threshold level of inflation above which inflation significantly slows growth is estimated at 1–3 percent for industrial countries and 7–11 percent for developing countries. The negative and significant relationship between inflation and growth, for inflation rates above the threshold level, is quite robust with respect to the estimation method, perturbations in the location of the threshold level, the exclusion of high-inflation observations, data frequency, and alternative specifications.
Threshold Effects In The Relationship Between Inflation And Growth
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Author : Mukhtar Hussain Khan
language : en
Publisher:
Release Date : 2000
Threshold Effects In The Relationship Between Inflation And Growth written by Mukhtar Hussain Khan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2000 with categories.
Threshold Effects In The Relationship Between Inflation And Growth
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Author : Mohsin S. Khan
language : en
Publisher:
Release Date : 2007
Threshold Effects In The Relationship Between Inflation And Growth written by Mohsin S. Khan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with categories.
This paper reexamines the issue of the existence of threshold effects in the relationship between inflation and growth, using new econometric techniques that provide appropriate procedures for estimation and inference. The threshold level of inflation above which inflation significantly slows growth is estimated at 1-3 percent for industrial countries and 7-11 percent for developing countries. The negative and significant relationship between inflation and growth, for inflation rates above the threshold level, is quite robust with respect to the estimation method, perturbations in the location of the threshold level, the exclusion of high-inflation observations, data frequency, and alternative specifications.
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.
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.
Threshold Effects In The Relationship Between Inflation And Economic Growth
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Author : Rutayisire Musoni
language : en
Publisher:
Release Date : 2015
Threshold Effects In The Relationship Between Inflation And Economic Growth written by Rutayisire Musoni and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with Finance, Public categories.
Threshold Effects Of Inflation On Growth In The Asean 5 Countries
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Author : Su Dinh Thanh
language : en
Publisher:
Release Date : 2015
Threshold Effects Of Inflation On Growth In The Asean 5 Countries written by Su Dinh Thanh and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
The relationship between inflation and economic growth is a contentious issue. The present study is undertaking to test hypothesis that the relationship between inflation and economic growth is nonlinear.This pane data study involves ASEAN-5 countries over the period 1980-2011. Panel Smooth Transition Regression (PSTR) model is employed to estimate the threshold of inflation and its effects on economic growth. Furthermore, we also check robustness by using GMM-IV specification. The study finds that there exists a statistically significant negative relationship between inflation and growth for the inflation rates above the threshold level of 7.84%, above which inflation starts impeding economic growth in the ASEAN-5 countries. The results suggest that central banks in the ASEAN-5 countries could improve economic growth by reducing inflation when it is above or near the estimated thresholds. The threshold inflation level can be considered, therefore, as inflation targeting indicator to conduct monetary policy.
Non Productive Consumption Loans And Threshold Effects In The Inflation Growth Relationship
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Author : Fu-Sheng Hung
language : en
Publisher:
Release Date : 2010
Non Productive Consumption Loans And Threshold Effects In The Inflation Growth Relationship written by Fu-Sheng Hung 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.
Recent empirical evidence indicates that two inflation thresholds exist in the inflation-growth relationship. Pre-existing theoretical models, however, fail to generate such a pattern. By adding consumption loans (which are non-productive) into a standard model of imperfect information, this paper finds that an increase in the inflation rate may increase, decrease, or have no significant effect on economic growth for inflation rates below a threshold level; however, for inflation rates higher than this threshold level, an increase in the inflation rate significantly reduces economic growth. Moreover, the marginal impact of an increase in the inflation rate in terms of reducing economic growth increases with the rise in the inflation rate, until the inflation rates reach the second threshold level, from which such a marginal effect significantly decreases. These results accord well with recent empirical evidence.
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.