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Author: | Gillman, M. Harris, M.N. |
Title: | The effect of inflation on growth evidence from a panel of transition countries |
Journal: | Economics of transition
2010 : OCT, VOL. 18:4, p. 697-714 |
Index terms: | growth transition economies panel data inflation money demand |
Freeterms: | endogeneity models results |
Language: | eng |
Abstract: | The article examines the effect of inflation on growth in transition countries and presents panel data evidence for 13 transition countries over the 19902003 period as well as uses a fixed effects panel approach to account for possible bias from correlations among the unobserved effects and the observed country heterogeneity. The author expounds the following results: i) A strong, robust, negative effect on growth of inflation or its standard deviation, and one that appears to decline in magnitude as the inflation rate increases, as seen for OECD countries. ii) A role for a normalized money demand in affecting growth, as well as for a convergence variable, a trade variable and a government share variable. Robustness of the baseline single-equation model is examined by expanding this into a three-equation simultaneous system of output growth, inflation and money demand that allows for possible simultaneity bias in the baseline model. |
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