Inflation, Disinflation, and Growth

May 1, 1998

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Format: Chicago

Atish R. Ghosh, and Steven T Phillips. Inflation, Disinflation, and Growth, (USA: International Monetary Fund, 1998) accessed December 26, 2024

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

Although few would doubt that very high inflation is bad for growth, there is much less agreement about moderate inflation’s effects. Using panel regressions and a nonlinear specification, this paper finds a statistically and economically significant negative relationship between inflation and growth. This relationship holds at all but the lowest inflation rates and is robust across various samples and specifications. The method of binary recursive trees identifies inflation as one the most important statistical determinants of growth. Finally, while there are short-run growth costs of disinflation, these are only relevant for the most severe disinflations, or when the initial inflation rate is well within the single-digit range.

Subject: Agroindustries, Disinflation, Economic sectors, Expenditure, Human capital, Inflation, Labor, Prices, Public expenditure review

Keywords: Agroindustries, Disinflation, Exchange rate, GDP growth, Global, Growth determinants, Growth regressions, Human capital, Inflation, Inflation coefficient, Inflation-growth association, Inflation-growth relationship, Public expenditure review, Rate of inflation, Robustness, Terms of trade, WP

Publication Details

Pages:

44
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1998/068
Stock No:

WPIEA0681998
ISBN:

9781451961188
ISSN:

1018-5941

Notes

Also published in Staff Papers, Vol. 45, No. 4, December 1998.

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