Fresh Insight on the Determinants of Economic Growth with Focus on Inflation-Growth Nexus Evidence from Developing Countries

Abstract

This study is the empirical effort of inquiring the link between inflation and economic growth in the context of other factors determining economic growth in selected developing countries. While utilizing Generalized Method of Moments (Difference and System GMM), the study found an inverse insignificant connection between inflation and economic growth. Furthermore, the sample developing countries tend to have highly positively evaluated by their lagged economic growth as well as the government consumption expenditures and agriculture sector productivity and all of these are having robust role on economic growth. Additionally, the economic impact of trade openness and money supply is mixed and even significant in some cases designating that developing countries can improve their economic growth through financial and trade development. These findings help rethink economic policy makers in developing countries for following inflation targeting policies and to utilize their public developmental expenditures to improve their primary sector (agriculture) productivity in order to enhance economic growth.