Abstract
Recent articles in the new growth literature find that growth and inflation are negatively related, a finding that is usually thought to reflect a long-run relationship. But the inflation-growth correlation is only present with high frequency data and with extreme inflation observations; there is no cross-sectional correlation between long-run averages of growth and inflation. We propose that examination of discrete high inflation crises (periods when inflation is above some threshold, which we propose to be 40% annual) helps unravel these empirical paradoxes. We establish a robust finding that growth falls sharply during discrete high inflation crises, then recovers rapidly and strongly after inflation falls.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
