Inflation and growth

New evidence from a dynamic panel threshold analysis

Stephanie Kremer, Alexander Bick, Dieter Nautz

Research output: Contribution to journalArticle

97 Citations (Scopus)

Abstract

We introduce a dynamic panel threshold model to estimate inflation thresholds for long-term economic growth. Advancing on Hansen (J Econom 93:345-368, 1999) and Caner and Hansen (Econom Theory 20:813-843, 2004), our model allows the estimation of threshold effects with panel data even in case of endogenous regressors. The empirical analysis is based on a large panel-dataset including 124 countries. 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 rates exceeding 17% are associated with lower economic growth. Below this threshold, however, the correlation remains insignificant.

Original languageEnglish (US)
Pages (from-to)861-878
Number of pages18
JournalEmpirical Economics
Volume44
Issue number2
DOIs
StatePublished - 2013
Externally publishedYes

Fingerprint

Inflation
inflation
Economic Growth
economic growth
evidence
Threshold Model
central bank
Panel Data
Empirical Analysis
Estimate
Target
Evidence
Dynamic panel
Economic growth
Model
Inflation target
Endogenous regressors
Central bank
Inflation rate
Developed countries

Keywords

  • Dynamicpanel threshold model
  • Inflation and growth
  • Inflation thresholds

ASJC Scopus subject areas

  • Economics and Econometrics
  • Social Sciences (miscellaneous)
  • Mathematics (miscellaneous)
  • Statistics and Probability

Cite this

Inflation and growth : New evidence from a dynamic panel threshold analysis. / Kremer, Stephanie; Bick, Alexander; Nautz, Dieter.

In: Empirical Economics, Vol. 44, No. 2, 2013, p. 861-878.

Research output: Contribution to journalArticle

Kremer, Stephanie ; Bick, Alexander ; Nautz, Dieter. / Inflation and growth : New evidence from a dynamic panel threshold analysis. In: Empirical Economics. 2013 ; Vol. 44, No. 2. pp. 861-878.
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