The long-run relationship between inflation and output in postwar economies

Bullard, James B.; Keating, John W.

doi:10.1016/0304-3932(95)01227-3

Cited by 250 publications

(211 citation statements)

References 8 publications

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“…In the view of Bruno and Easrerly (1998), inflation rate which is over 40% might cause inverse relationship between inflation and economic growth. Bullard and Keatry(1995) agreed that negative relationship exist only if the inflation rates exceeded certain threshold as well. But Levin and Zervos(1998) and Clark(1993) found that uniformly negative relationship that exist between economic growth and inflation depend on the previous consumer price index(CPI) rate.…”

Section: Materials Studiedmentioning

confidence: 98%

Determinants of Export: Empirical Study in Malaysia

Lee¹,

Har²,

Zhengyi³

et al. 2016

JIBE

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This research aims to study the relationship of export with four determinants, namely import, inflation, foreign direct investment (FDI), and exchange rate. Sample years are 1975 to 2013. Ordinary least square (OLS) is used. Results revealed that import has positive relationship with export. This implied that Malaysia import may be an "assembly point exporter". Electric and electrical (E&E), which is Malaysia major export component has high possibly where inputs are imported, then assembly and exported. Foreign exchange rate (domestic currency in term of foreign) has positive relationship with export, thus validating Marshall Learner hypothesis. Inflation has negative relationship as higher aggregate price increase cost of production and decreasing price competitiveness of export. Foreign direct investment has an inverted-U curve relationship, which give further insight into conflicting evidence of linear relationship between export and FDI. Facilities provided to promote export may attract inflow of foreign investment. However, if FDI is targeted to produce for domestic market, it may not contribute to export growth.

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Section: Materials Studiedmentioning

confidence: 98%

Determinants of Export: Empirical Study in Malaysia

Lee¹,

Har²,

Zhengyi³

et al. 2016

JIBE

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“…They …nd that, for most G-7 countries, annual time series of in ‡ation and the log-level of output are cointegrated, thus rejecting the existence of a long-run relation between output growth and in ‡ation. Following a di¤erent econometric approach, Bullard and Keating (1995), using a large sample of postwar countries, …nd that a permanent shock to in ‡ation is not associated with a long-run change in real output for high in ‡ation economies. Using instrumental variables to account for in ‡ation-growth endogeneity bias, Gillman and Nakov (2004) show that the negative non-linear e¤ect is reinstated at all positive in ‡ation levels for both developed and developing countries.…”

Section: In ‡Ation and Growthmentioning

confidence: 99%

Debt, Inflation and Growth Robust Estimation of Long-Run Effects in Dynamic Panel Data Models

Chudík¹,

Mohaddes²,

Pesaran³

et al. 2013

gwp

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This paper investigates the long-run effects of public debt and inflation on economic growth. Our contribution is both theoretical and empirical. On the theoretical side, we develop a cross-sectionally augmented distributed lag (CS-DL) approach to the estimation of long-run effects in dynamic heterogeneous panel data models with cross-sectionally dependent errors. The relative merits of the CS-DL approach and other existing approaches in the literature are discussed and illustrated with small sample evidence obtained by means of Monte Carlo simulations. On the empirical side, using data on a sample of 40 countries over the 1965-2010 period, we find significant negative long-run effects of public debt and inflation on growth. Our results indicate that, if the debt to GDP ratio is raised and this increase turns out to be permanent, then it will have negative effects on economic growth in the long run. But if the increase is temporary then there are no long-run growth effects so long as debt to GDP is brought back to its normal level. We do not find a universally applicable threshold effect in the relationship between public debt and growth. We only find statistically significant threshold effects in the case of countries with rising debt to GDP ratios.

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“…For given ε, let q * ε denote the socially efficient quantity traded that satisfies (5). Note that q * 0 = 0 and ∂q * ε ∂ε = −u 0 εu 00 −c 00 > 0.…”

Section: The Modelmentioning

confidence: 99%

Inflation, Output, and Welfare

Lagos

Rocheteau

2004

SSRN Journal

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This paper studies the effects of anticipated inflation on aggregate output and welfare within a search-theoretic framework. We allow money-holders to choose the intensities with which they search for trading partners, so inflation affects the frequency of trade as well as the quantity of output produced in each trade. We consider the standard pricing mechanism for search models, i.e. ex-post bargaining, as well as a notion of competitive pricing. If prices are bargained over, the equilibrium is generically inefficient and an increase in inflation reduces buyers' search intensities, output and welfare. If prices are posted and buyers can direct their search, search intensities are increasing with inflation for low inflation rates and decreasing for high inflation rates. The Friedman Rule achieves the first best allocation and inflation always reduces welfare even though it can have a positive effect on output for low inflation rates.

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The long-run relationship between inflation and output in postwar economies

Cited by 250 publications

References 8 publications

Determinants of Export: Empirical Study in Malaysia

Determinants of Export: Empirical Study in Malaysia

Debt, Inflation and Growth Robust Estimation of Long-Run Effects in Dynamic Panel Data Models

Inflation, Output, and Welfare

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