Threshold Effects of Inflation on Economic Growth: Is Africa Different?

Ndoricimpa, Arcade

doi:10.1080/10168737.2017.1380679

Cited by 46 publications

(48 citation statements)

References 26 publications

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“…This allows us to avoid an overfit of instrumented variables which is likely to lead to the coefficient with bias. This approach is also used by Ndoricimpa (2017). The choice of instruments does not affect the estimated public health expenditure threshold and the nonlinear relationship still valid (see Appendix 1).…”

Section: Robustness Checkmentioning

confidence: 99%

Threshold Effects of Health on Economic Growth in Sub-Saharan African Countries: Evidence from a Dynamic Panel Threshold Model

Kouton¹,

N’Guessan²,

Ayivodji³

2018

JEDS

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This paper investigates the presence of threshold effects in the health-economic growth nexus for 24 Sub-Saharan Africa countries. We apply a dynamic panel threshold model and find that health human capital stock, measured by life expectancy at birth, has a positive and significant impact on economic growth. This impact becomes more important as health investments, captured by public health expenditures, increase. We estimate a threshold of 3.5% of the ratio public health expenditures/GDP above which life expectancy at birth has a higher impact on economic growth. This may be due to the fact that even if life expectancy is increased, individuals will not be productive unless they are able to maintain and improve their health status. We recommend investments in health in order to make drugs purchase much easier. More investments should be devoted to fight malaria, HIV/AIDS and diseases with a high morbidity that reduce the productivity of individuals.

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Section: Robustness Checkmentioning

confidence: 99%

Threshold Effects of Health on Economic Growth in Sub-Saharan African Countries: Evidence from a Dynamic Panel Threshold Model

Kouton¹,

N’Guessan²,

Ayivodji³

2018

JEDS

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“…A vast majority of the earlier empirical literature based their empirical estimates on panels consisting of both developing and developed economies (Fischer (1993), Barro (1995), Bruno andEasterly (1998), Sarel (1996), Ghosh and Phillips (1998) and Kahn and Senhadji (2001), Drukker et al (2005), Hineline (2007), Kremer et. (2009), Vaona (2012, Vinayagathasan (2013), Seleteng et al (2013), Eggoh and Kahn (2014), Ibarra and Trupkin (2016) and Ndoricimpa (2017)). Notably these studies advocate for a negative effect of inflation on economic growth in both developed and developing economies, although inflation was deemed to have a stronger adverse effect in industrialized economies.…”

Section: Literature Reviewmentioning

confidence: 99%

Inflation-Growth Nexus in Botswana: Can Lower Inflation Really Spur Growth in the Country?

Mothuti

Phiri

2018

Glob. Econ. J.

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Does inflation affect economic growth in Botswana over the short-run and longrun? In applying bounds procedure for modelling ARDL cointegation effects applied to empirical data collected between 1975 and 2016 we find that this hypothesis does not hold true for Botswana as inflation is found to be insignificantly related with economic growth over both the short and long-run. Our growth equation estimates point to exports (positive), government size (negative) and an Pula/Dollar exchange rate (negative) as being significantly correlated with steady-state GDP growth. Further empirical exercises show that an appreciated Pula/dollar exchange rate increases inflation whilst bearing no effect on economic growth. Conversely, a depreciated Pula/Dollar exchange simultaneously decreases inflation and economic growth for the Botswana economy. Policymakers should be this aware that attainment of lower inflation rates which occurs through a depreciated Pula/Dollar currency will only retard economic growth.

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“…Collectively, these findings from Seleteng et al (2013), Ndoricimpa (2017) and Omay et al (2018) imply that the commonly pursuit of low, single-digit inflation rates in these African countries may be over-prioritized at the expense of other development objectives. On the other hand, it may be possible that the current inflation may be higher than some 'threshold' which would deteriorate welfare and economic growth.…”

Section: Introductionmentioning

confidence: 94%

“…Take for instance, the study of Seleteng et al (2013) who find an optimal inflation threshold of 18.9 percent for a panel of 10 members of the Southern African Development Community (SADC) countries inconclusive of Swaziland. Similarly, Ndoricimpa (2017) finds an inflation threshold of 8 percent for a group of 47 African economies whilst Omay et al (2018) establish an inflation threshold of 12 percent for 11 SADC members which are also inclusive of Swaziland.…”

Section: Introductionmentioning

confidence: 99%

“…Another fallacy of these previous studies is the panel 'homogeneity' problem in which a singular empirical finding is generalized for a host of countries with multiple difference in economic circumstances and structures. In the case of African countries, Seleteng et al (2013), Ndoricimpa (2017) and Omay et al (2018) serve as prime examples to these fallacies.…”

Section: Introductionmentioning

confidence: 99%

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Endogenous monetary approach to optimal inflation–growth nexus in Swaziland

Phiri

2020

AJEMS

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With the inflation-growth nexus being a hotly debated issue within the academic paradigm, the purpose of our study is to examine the relationship for Swaziland between 1975 and 2016 of which there currently exists very limited country-specific evidence. In the design of our study we theoretically depend on an endogenous monetary model of economic growth augmented with a credit technology which causes a nonlinear relationship between inflation and growth. Econometrically, we rely on the smooth transition regression (STR) which allows us to estimate an optimal inflation rate characterized by smooth transition between different inflation regimes. Our empirical results point to an inflation threshold estimate of 7.64% at which economic growth gains are maximized or similarly growth losses are minimized. In particular, we find that above the inflation threshold economic agents may be able to protect themselves from inflation through credit technology and a more urbanized population yet such high inflation adversely affects the influence of exports on economic growth. This noteworthy since a majority of government revenues is from trade activity via the country's affiliation with the Southern African Customs Union (SACU). Nevertheless, the major contribution of this paper is that it becomes the first to use endogenous growth theory to estimate the inflation threshold for any African country which will hopefully pave a way for similar studies on other African countries.

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Threshold Effects of Inflation on Economic Growth: Is Africa Different?

Cited by 46 publications

References 26 publications

Threshold Effects of Health on Economic Growth in Sub-Saharan African Countries: Evidence from a Dynamic Panel Threshold Model

Threshold Effects of Health on Economic Growth in Sub-Saharan African Countries: Evidence from a Dynamic Panel Threshold Model

Inflation-Growth Nexus in Botswana: Can Lower Inflation Really Spur Growth in the Country?

Endogenous monetary approach to optimal inflation–growth nexus in Swaziland

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