Does inflation cause poor long-term growth performance?

Guerrero, Federico

doi:10.1016/j.japwor.2004.06.002

Cited by 21 publications

(22 citation statements)

References 8 publications

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“…Furthermore, the growth-maximizing in ‡ation rate is about 2.9%, which is close to the empirical estimate in López-Villavicencio and Mignon (2011) who …nd a threshold in ‡ation rate of 2.7% for industrialized countries. In the empirical literature, studies sometime …nd a monotonically negative e¤ect of in‡ation on economic growth; see for example, Guerrero (2006) and Vaona (2012). Indeed, we …nd that our model is ‡exible enough to deliver a negative relationship between in ‡ation and economic growth under reasonable parameter values.…”

Section: Quantitative Analysismentioning

confidence: 64%

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Inflation and economic growth in a Schumpeterian model with endogenous entry of heterogeneous firms

Chu

Cozzi

Furukawa

et al. 2017

European Economic Review

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This study develops a Schumpeterian growth model with endogenous entry of heterogeneous …rms to analyze the e¤ects of monetary policy on economic growth via a cash-in-advance constraint on R&D investment. Our results can be summarized as follows. In the special case of a zero entry cost, an increase in the nominal interest rate decreases R&D, the arrival rate of innovations and economic growth as in previous studies. However, in the general case of a positive entry cost, an increase in the nominal interest rate a¤ects the distribution of innovations that are implemented and would have an inverted-U e¤ect on economic growth if the entry cost is su¢ ciently large. We also calibrate the model to aggregate data of the US economy and …nd that the growth-maximizing in ‡ation rate is about 3%, which is consistent with recent empirical estimates.JEL classi…cation: O30, O40, E41

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Section: Quantitative Analysismentioning

confidence: 64%

“…Given that (ln~ + ) is also increasing in~ ; this implies dg=d~ > 0 for~ < 1=(1 ); by noting (21). To see the case where 1=(1 ) <~ ; using (21) and (B9), we can obtain Using these properties, we can graphically show that (~ ) intersects (~ ) from below only once at some point in~ 2 (1=(1 ); ), below (above) which dg=d~ > (<) 0.…”

Section: Resultsmentioning

confidence: 99%

Inflation and economic growth in a Schumpeterian model with endogenous entry of heterogeneous firms

Chu

Cozzi

Furukawa

et al. 2017

European Economic Review

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“…We therefore expect this instrument to be valid and uncorrelated with the error term. Guerrero (, p. 73) provides both theoretical arguments and statistical analysis to support the validity of hyperinflation as an instrument for stable monetary outcomes: “Simply knowing if a country had a hyperinflation in the past provides considerable information on its subsequent inflation performance: economies that have had hyperinflation display substantially lower rates of inflation.” Equally important, past hyperinflationary experiences are not affected by tolerance. Having two instruments is moreover clearly advantageous, since it allows us to examine the validity of the instruments using a Sargan test.…”

Section: Resultsmentioning

confidence: 99%

“…() that captures the extent to which the central bank is independent from the political power in a country. The hyperinflation measure is a dummy which takes the value 1 if a country has a past experience of hyperinflation, and it is collected from Guerrero ().…”

Section: The Datamentioning

confidence: 99%

Does Economic Freedom Foster Tolerance?

Berggren

Nilsson

2013

Kyklos

112

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractTolerance has the potential to affect both economic growth and wellbeing. It is therefore important to discern its determinants. We add to the literature by investigating whether the degree to which economic institutions and policies are market-oriented is related to different measures of tolerance.Regression analysis of up to 65 countries reveals that economic freedom is positively related to tolerance towards homosexuals, especially in the longer run, while tolerance towards people of a different race and a willingness to teach kids tolerance are not strongly affected by how free markets are. Stable monetary policy and outcomes is the area of economic freedom most consistently associated with greater tolerance, but the quality of the legal system seems to matter as well. We furthermore find indications of a causal relationship and of social trust playing a role as a mechanism in the relationship between economic freedom and tolerance and as an important catalyst: the more trust in society, the more positive the effect of economic freedom on tolerance.

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“…Gomme ( 1993 ) conducted research in this area which covered 100 countries between 1960 and 1990, and found that a negative relationship between in fl ation and economic growth. Barro ( 1995 ) , Kormandi and Meguire ( 1985 ) , Fischer ( 1993 ) , DeGregorio ( 1993 ) , Gylfason and Herbertsson ( 2001 ) , Valdovinoz ( 2003 ) , and Guerrero ( 2006 ) detected a similar relationship, that is, in fl ation has negative effects on economic growth. Generally, most of the studies found that an increase in in fl ation reduces economic growth.…”

Section: In Fl Ation and Economic Growthmentioning

confidence: 84%

The Role of Macroeconomic Fundamentals in Malaysian Post Recession Growth

Lee

2012

Recession and Its Aftermath

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Does inflation cause poor long-term growth performance?

Cited by 21 publications

References 8 publications

Inflation and economic growth in a Schumpeterian model with endogenous entry of heterogeneous firms

Inflation and economic growth in a Schumpeterian model with endogenous entry of heterogeneous firms

Does Economic Freedom Foster Tolerance?

The Role of Macroeconomic Fundamentals in Malaysian Post Recession Growth

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