Inflation Thresholds and Growth

International Economic Journal, Forthcoming

12 Pages Posted: 23 Nov 2011 Last revised: 19 Dec 2011

See all articles by Hakan Yilmazkuday

Hakan Yilmazkuday

Florida International University (FIU) - Department of Economics

Date Written: March 25, 2011

Abstract

This paper investigates inflation thresholds that lead to higher growth rates using five-year averages of standard variables for 84 countries from 1965 to 2004. The historical experience has important policy implications for developing countries: (i) the catch-up effect has worked only when inflation is below 12%; (ii) the positive effect of human capital on growth has been present and significant when inflation has been below 15%; (iii) financial development has been effective only when inflation has been below 10%; (iv) government size has negatively affected growth when inflation has been below 10%; (v) trade has positively affected growth when inflation has been below 8%.

Keywords: Financial development, Economic growth, Thresholds, Cross-country analysis

JEL Classification: E31, E44, F36, O16, O47

Suggested Citation

Yilmazkuday, Hakan, Inflation Thresholds and Growth (March 25, 2011). International Economic Journal, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1963307

Hakan Yilmazkuday (Contact Author)

Florida International University (FIU) - Department of Economics ( email )

11200 SW 8th Street
Miami, FL 33199
United States

HOME PAGE: http://faculty.fiu.edu/~hyilmazk/

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