Affiliation:
1. Universidad Autónoma de Guadalajara
Abstract
The article examines, based on panel regressions, the long-term relationship between inflation and economic growth based on information for 70 countries and annual data for 1950-2010 The results do not find evidence of a significant trade-off between in fl ation and long-term growth for this sample and period, except if national experiences with average annual in fl ations above the annual 65% threshold are included. That is, outside regimes with persistently very high rates of inflation, there is no systematic or significant inverse relationship between inflation and the growth rate of productive activity. The absence of such long-term trade-off for the aggregate panel is far from implying that for any individual economy the inflation undermines its growth only if it exceeds the 65% per annum The analysis by groups of countries reveals that the value of the threshold of significance is a function of the current monetary regime.
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