The effect of inflation on growth: Evidence from a panel of transition countries

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Cardiff Economics Working Papers ; No. E2008/25

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models ; Financial Markets and the Macroeconomy ; Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance ; Monetary Growth Models
• Subject: growth ; transition ; panel data ; inflation ; money demand ; endogeneity ; Geldpolitik ; Inflation ; Wirtschaftswachstum ; Panel ; Transformationsstaaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gillman, Max ; Harris, Mark N.
• Event: Veröffentlichung
• (who): Cardiff University, Cardiff Business School
• (where): Cardiff
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/65809
• Last update: 10.03.2025, 11:42 AM CET