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

Two major findings of the empirical literature on the connection between inflation and output growth is that their relationship is non linear and that there exists a threshold inflation level below which inflation has a positive impact on growth and above which inflation has a negative impact on growth. In this paper we adopt a semiparametric estimator and we 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 10% for developed countries and 15% for developing ones. However, below the threshold level inflation does not appear to have a positive impact on growth, rather it does not have any substantial effect on it.

[1]  M. Leffler.  Bush's Foreign Policy , 2004 .

[2]  Giulia Felice,et al.  Dinamica strutturale e occupazione nei servizi , 2003 .

[3]  Roberto Tamborini,et al.  One "monetary giant" with many "fiscal dwarfs": The efficiency of macroeconomic stabilization policies in the European Monetary Union , 2002 .

[4]  Vasco Ladislao Boatto,et al.  CONTRATTO D'AREA COOPERATIVO CONTRO IL RISCHIO SISTEMICO DI PRODUZIONE IN AGRICOLTURA , 2003 .

[5]  Nicolas Garrido.  The Desirable Organizational Structure for Evolutionary Firms in Static Landscapes , 2004 .

[6]  M. Pugno,et al.  The Underground Economy and the Underdevelopment Trap , 2002 .

[7]  Carlo Borzaga,et al.  Worker involvement in entrepreneurial nonprofit organizations. Toward a new assessment of workers' perceived satisfaction and fairness , 2004 .

[8]  Marco Bee,et al.  FIRMS' BANKRUPTCY AND TURNOVER IN A MACROECONOMY , 2004 .

[9]  A. Ullah,et al.  Nonparametric Econometrics , 1999 .

[10]  Roberto Tamborini,et al.  The monetary transmission mechanism in Italy: the credit channel and a missing ring , 2001 .

[11]  L. Bonatti,et al.  Interregional Income Redistribution and Convergence in a Model with Perfect Capital Mobility and Unionized Labor Markets , 2005 .

[12]  K. Vela Velupillai,et al.  The Foundations of Computable General EquilibriumTheory , 2005 .

[13]  Ruth Judson,et al.  Inflation, Volatility and Growth , 1996 .

[14]  K. Vela Velupillai,et al.  Hicksian Visions and Vignettes on (Non-Linear) Trade Cycle Theories , 2004 .

[15]  Pierre-Daniel G. Sarte,et al.  Inflation uncertainty and growth in a cash-in-advance economy , 2000 .

[16]  Gabriella Berloffa,et al.  Trade, Inequality and Pro-Poor Growth: Two Perspectives, One Message? , 2004 .

[17]  Giuseppe Espa,et al.  Statistical Economic Approach to Mixed Stock-Flow Dynamic Models in Macroeconomics , 2002 .

[18]  Mohsin S. Khan,et al.  Threshold Effects in the Relationship between Inflation and Growth , 2000, SSRN Electronic Journal.

[19]  Working Paper,et al.  The impossibility of an Effective Theory of Policy in a Complex Economy , 2005 .

[20]  Roberto Tamborini,et al.  Why does money matter? A structural analysis of monetary policy, credit and aggregate supply effects in Italy , 2005 .

[21]  Giuseppe Espa,et al.  Un modello finanziario di breve periodo per il settore statale italiano: l’analisi relativa al contesto pre−unione monetaria , 2005 .

[22]  Thorvaldur Gylfason,et al.  Does In‡ation Matter for Growth? ¤ , 2001 .

[23]  Alberto Abadie.  Semiparametric instrumental variable estimation of treatment response models , 2003 .

[24]  Hubert Gabrisch,et al.  WHY IS TRADE BETWEEN THE EUROPEAN UNION AND THE TRANSITION ECONOMIES VERTICAL , 2002 .

[25]  Michael Sarel,et al.  Nonlinear Effects of Inflation on Economic Growth , 1995, SSRN Electronic Journal.

[26]  K. Velupillai.  Morishima's Nonlinear Model of the Cycle: Simplifications and Generalizations , 2005 .

[27]  Sangin Park,et al.  Semiparametric instrumental variables estimation , 2003 .

[28]  A. Thirlwall,et al.  Inflation and growth: the international evidence , 1971 .

[29]  Alexandra Tabova.  On the feasibility and desirability of GDP-indexed concessional lending , 2005 .

[30]  T. Beck,et al.  A New Database on the Structure and Development of the Financial Sector , 2000 .

[31]  J. Temple.  Inflation and Growth: Stories Short and Tall , 2000 .

[32]  Stanley Fischer,et al.  The Role of Macroeconomic Factors in Growth , 1993 .

[33]  Luigi Mittone,et al.  PROFIT VERSUS NON-PROFIT FIRMS IN THE SERVICE SECTOR : AN ANALYSIS OF THE EMPLOYMENT AND WELFARE IMPLICATIONS by , 2002 .

[34]  Giorgio Fodor.  The boom that never was? Latin American loans in London 1822-1825 , 2002 .

[35]  Ruth A. Judson.  In ation, Volatility and Growth , 1996 .

[36]  L. Mátyás,et al.  Inflation and growth: Explaining a negative effect , 2004 .

[37]  Axel Leijonhufvud.  The long swings in economic understanding , 2003 .

[38]  P. Robinson.  ROOT-N-CONSISTENT SEMIPARAMETRIC REGRESSION , 1988 .

[39]  Stefano Comino,et al.  From Planning to Mature: On the Determinants of Open Source Take-Off , 2007 .

[40]  Lorenzo Sacconi,et al.  The Constitution of the Not-For-Profit Organisation: Reciprocal Conformity to Morality , 2005 .

[41]  Maurizio Pugno.  Unbalanced Growth and Women's Homework , 2001 .

[42]  K. Vela Velupillai,et al.  A Primer on the Tools and Concepts of Comutable Economics. , 2004 .

[43]  K. Velupillai.  ECONOMICS AND THE COMPLEXITY VISION: CHIMERICAL PARTNERS OR ELYSIAN ADVENTURERS? , 2003 .

[44]  Lorenzo Sacconi,et al.  A Social Contract Account for CSR as Extended Model of Corporate Governance (Part I): Rational Bargaining and Justification , 2004 .

[45]  Christopher L. Gilbert,et al.  Can we link concessional debt service to commodity prices , 2005 .

[46]  T. Beck,et al.  A New Database on Financial Development and Structure , 1999 .

[47]  Matteo Ploner,et al.  The Financial Markets and Wealth Effects on Consumption: an Experimental Analysis , 2003 .

[48]  Matteo Motterlini,et al.  Metodo e Valutazione in Economia Dall'apriorismo a Friedman , 2000 .

[49]  C. Gilbert,et al.  How is Futures Trading Affected by the Move to a Computerized Trading System? Lessons from the Liffe Ftse 100 Contract , 2002 .

[50]  Vela Ela Velupillai.  The unreasonable ineffectiveness of mathematics in economics , 2005 .

[51]  Roberto Tamborini,et al.  From Kuwait to Kosovo: what have we learned; reflections on globalization and peace , 2000 .

[52]  Thorvaldur Gylfason,et al.  Does inflation matter for growth , 2001 .

[53]  Roberto Benedetti,et al.  A Tree-Based Approach to Forming Strata in Multipurpose Business Surveys , 2005 .

[54]  Christopher L. Gilbert,et al.  Commodity prices and debt sustainability , 2004 .