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MONETARY POLICY, BANKING, AND GROWTH

Joseph H. Haslag

Open publisher page 45 citations

Abstract

There is ample empirical evidence suggesting that countries with high inflation tend to grow slower than countries with low inflation. Based on the regression evidence, the inflation‐rate effect is fairly large; on average, per‐capita real GDP grows between 1/4‐ and 3/4‐percentage‐points slower in a country in which the average inflation rate is 10% as compared with a country in which inflation is 0%. The purpose of this paper is to determine whether a model economy that is reasonably calibrated can account for such large inflation‐rate effects. The answer is yes. (JEL O41, E58)

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What this paper is about

There is ample empirical evidence suggesting that countries with high inflation tend to grow slower than countries with low inflation. Based on the regression evidence, the inflation‐rate effect is fairly large; on average, per‐capita real GDP grows between 1/4‐ and 3/4‐percentage‐points slower in a country in which the average inflation rate is 10% as compared with a country in which inflation is 0%. The purpose of this paper is to determine whether a model economy that is reasonably calibrated can account for such large inflation‐rate effects. The answer is yes. (JEL O41, E58)

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OpenAlex reports 45 citations for this work. Citation counts describe recorded attention and do not establish research quality.

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Available abstract

There is ample empirical evidence suggesting that countries with high inflation tend to grow slower than countries with low inflation. Based on the regression evidence, the inflation‐rate effect is fairly large; on average, per‐capita real GDP grows between 1/4‐ and 3/4‐percentage‐points slower in a country in which the average inflation rate is 10% as compared with a country in which inflation is 0%. The purpose of this paper is to determine whether a model economy that is reasonably calibrated can account for such large inflation‐rate effects. The answer is yes. (JEL O41, E58)

Key concepts: Economics, Inflation (cosmology), Inflation rate, Real interest rate, Monetary economics, Monetary policy, Per capita, Macroeconomics

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