Estimating the Inflation-Growth Nexus: A Smooth Transition Model

Espinoza, Raphaël; Leon, Hyginus; Prasad, Ananthakrishnan

doi:10.2139/ssrn.1578674

Cited by 7 publications

(5 citation statements)

References 10 publications

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“…The results of the study revealed that the effect of inflation on economic growth is positive even though it becomes statistically considerable for industrial countries, however, when the threshold level is above inflation, then the relationship becomes coheritor for both countries. Espinoza et al (2010) investigated the effect of inflation on economic growth using panel smooth transition regression of 165 countries to estimate inflation threshold at 10% in developing countries and 13% for countries exporting oil. The results of the study revealed that there is nonlinearity correlation among these variables.…”

Section: Effects Of Inflation On Economic Growthmentioning

confidence: 99%

Effect of Unemployment and Inflation on Economic Growth in South Africa

Sekwati

Dagume

2023

IJEFI

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The key macroeconomic objectives being pursued by any developing country are low unemployment, low inflation, and sustainable growth. The main aim of this study was to analyze the effect of unemployment and inflation on economic growth in South Africa for the period of 1994 to 2018, using quarterly data. The results of the unit root test using the Augmented Dickey Fuller and Phillips Perron tests showed that all the variables have a unit root in levels and became stationary after first differencing. The Johansen co-integration test outcomes showed that there is a long-run relationship among variables, and the Vector error correlation model confirmed that inflation and unemployment have a negative impact on economic growth. Furthermore, the results of the tests for White Heteroskedasticity, Jarque -Bera and Serial correlation LM reveal that there is no problem of Heteroskedasticity, data distribution or serial correlation respectively. The government should implement workable pricing regulations and enforce them to maintain stable price levels. The government should also through the Department of Higher Education and Training, establish a structure that connects the educational system with the industries in South Africa, allowing for the development of skills at the tertiary level and increasing employment.

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Section: Effects Of Inflation On Economic Growthmentioning

confidence: 99%

Effect of Unemployment and Inflation on Economic Growth in South Africa

Sekwati

Dagume

2023

IJEFI

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“…Ideally, to capture specific characteristics of each country, inflation threshold level should be estimated for each individual country separately. But because of limited data, as mentioned above, the majority of studies have used panel techniques (Espinoza et al 2010). This explains the reason why most of the research about inflation threshold are cross-country studies.…”

Section: B Estimation Of the Inflation Thresholdmentioning

confidence: 99%

“…Another study by Espinoza et al (2010) also used cross-country data from 165 countries over the period 1960 to 2007 to re-examine the classic relationship between inflation and economic growth. The Logarithm Smooth Transition model (LSTR) was firstly applied with several control variables as determinants of growth to measure the speed of transition at which inflation becomes harmful to growth after it is greater than the threshold.…”

Section: Cross-countrymentioning

confidence: 99%

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The Inflation-Economic Growth Relationship: Estimating the Inflation Threshold in Vietnam

Tran

2017

Econometrics for Financial Applications

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Utilizing annual data over the period 1990-2015 and employing the threshold model developed by Sarel (1996) with some modifications, this paper estimates the inflation threshold in Vietnam and simultaneously examines the linkage between inflation and economic growth. The findings show that the estimated inflation threshold stays at 3%-4%, above which the positive effect of inflation on economic growth vanishes, and this effect starts fading at 5.5%-7.5%. The findings of this paper regarding the inflation threshold and the inflation-economic relationship are expected to help the State Bank of Vietnam (SBV) in conducting its monetary policy, especially the inflation policy. Moreover, the findings also help the government evaluate the role of the gross domestic product's determinants in promoting the economic growth.

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Financial Development, Political Instability, Trade Openness and Growth in Brazil: Evidence from a New Dataset, 1890-2003

et al. 2022

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What is the relationship between financial development, political instability, trade openness and economic growth and how does it change over time? This paper examines these links using a new econometric approach and unique data set. In this paper, we apply the logistic smooth transition model (LST) to annual data for Brazil from 1890 to 2003. The main finding is that financial development has a time-varying effect on economic growth, which depends significantly on (jointly estimated) trade openness thresholds. In addition, political instability displays a negative effect on growth whereas trade openness a positive one. Finally, our estimates show that in 56% of the years in which financial development has a ‘below the mean’ effect, we find that trade openness experiences a substantial ‘above the mean’ change.

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Estimating the Inflation-Growth Nexus: A Smooth Transition Model

Cited by 7 publications

References 10 publications

Effect of Unemployment and Inflation on Economic Growth in South Africa

Effect of Unemployment and Inflation on Economic Growth in South Africa

The Inflation-Economic Growth Relationship: Estimating the Inflation Threshold in Vietnam

Financial Development, Political Instability, Trade Openness and Growth in Brazil: Evidence from a New Dataset, 1890-2003

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