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Title:The effect of inflation on growth: Evidence from a panel of transition countries PDF Logo
Authors:Gillman, Max
Harris, Mark N.
Issue Date:2008
Series/Report no.:Cardiff Economics Working Papers E2008/25
Abstract:The paper examines the effect of inflation on growth in transition countries. It presents panel data evidence for 13 transition countries over the 1990-2003 period; it uses a fixed effects, full-information maximum likelihood, panel approach to account for possible bias from correlations among the unobserved effects and the observed country heterogeniety. The results find a strong, robust, negative effect on growth, and one that declines in magnitude as the inflation rate increases. These results include a role for a normalized money demand, by itself and as part of a nonlinearity in the inflation-growth effect. And these results derive from both a baseline single equation model and one that is then expanded into a three equation simultaneous system. This allows for possible simultaneity bias in the baseline model.
Subjects:growth
transition
panel data
inflation
money demand
endogeneity
JEL:C23
E44
O16
O42
Document Type:Working Paper
Appears in Collections:Cardiff Economics Working Papers, Cardiff Business School, Cardiff University

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