How to order
IMF Publications

Working Papers in full text
2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 All


Other research-related activities and publications of the IMF can be found at IMF Research

Free Email Notification

Receive emails when we post new items of interest to you.

Subscribe or Modify your profile



Estimating The Inflation-Growth Nexus - A Smooth Transition Model

Author/Editor: Espinoza, Raphael A. | Leon, H. L. | Prasad, Ananthakrishnan
Authorized for Distribution: March 1, 2010
Electronic Access: Free Full Text (PDF file size is 1,426KB)
Use the free Adobe Acrobat Reader to view this PDF file.
 
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: 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.
 
Order a print copy
Series: Working Paper No. 10/76
Subject(s): Cross country analysis | Developed countries | Economic growth | Economic models | Emerging markets | Inflation | Monetary policy | Oil exporting countries | Production growth
Author's keyword(s): Inflation | growth | Phillips curve | Logistic Smooth Transition
 
English  
    Published:   March 1, 2010        
            Format:   Paper
    Stock No:   WPIEA2010076   Pages:   22
    Price:   US$18.00
       
     
Please address any questions about this title to publications@imf.org.