The Effects of Inflationon Economic Growth : Lessons From Latin America

Author/Editor:

Jose De Gregorio

Publication Date:

October 1, 1991

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:

This paper investigates the relationship between inflation and long-run growth. It presents an endogenous growth model that illustrates the channels through which inflation affects growth. The model highlights the effects of inflation on the productivity of capital and the rate of capital accumulation. The reduction in growth is caused by a diversion of resources away from activities that lead to faster rates of growth toward activities associated with reducing the costs of inflation. The negative association between inflation and growth is assessed empirically for a sample group of Latin American countries.

Series:

Working Paper No. 91/95

Subject:

English

Publication Date:

October 1, 1991

ISBN/ISSN:

9781451950304/1018-5941

Stock No:

WPIEA0951991

Format:

Paper

Pages:

15

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