Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/39331 
Year of Publication: 
2009
Series/Report no.: 
SFB 649 Discussion Paper No. 2009,036
Publisher: 
Humboldt University of Berlin, Collaborative Research Center 649 - Economic Risk, Berlin
Abstract: 
We introduce a dynamic panel threshold model to shed new light on the impact of inflation on long-term economic growth. The empirical analysis is based on a large panel-data set including 124 countries during the period from 1950 to 2004. For industrialized countries, our results confirm the inflation targets of about 2% set by many central banks. For non-industrialized countries, we estimate that inflation hampers growth if it exceeds 17%. Below this threshold, however, the impact of inflation on growth remains insignificant. Therefore, our results do not support growth-enhancing effects of inflation in developing countries.
Subjects: 
Inflation thresholds
inflation and growth
dynamic panel threshold model
JEL: 
E31
C23
O40
Document Type: 
Working Paper

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