Inflation Thresholds and the Finance-Growth Nexus
Inflation Thresholds and the Finance-Growth Nexus

Author: Peter L. Rousseau

Publisher:

Published: 2013

Total Pages: 0

ISBN-13:

DOWNLOAD EBOOK

The robustness of the cross-sectional relationship between the size of a country's financial sector and its rate of economic growth is by now well established. In this article, we examine whether the strength of this relationship varies with the inflation rate. Using five-year averages of standard measures of financial development, inflation, and growth for 84 countries from 1960 to 1995, a series of rolling panel regressions show that there is an inflation threshold for the finance-growth relationship that lies between 13 and 25 percent. When inflation exceeds the threshold, finance ceases to increase economic growth. We also find that the level of financial depth varies inversely with inflation in low-inflation environments and that disinflation is associated with a positive effect of financial depth on growth.

Inflation Thresholds and the Finance-Growth Nexus
Inflation Thresholds and the Finance-Growth Nexus

Author: Peter L. Rousseau

Publisher:

Published: 2008

Total Pages: 23

ISBN-13:

DOWNLOAD EBOOK

The robustness of the cross-sectional relationship between the size of a country's financial sector and its rate of economic growth is by now well established. In this article, we examine whether the strength of this relationship varies with the inflation rate. Using five-year averages of standard measures of financial development, inflation, and growth for 84 countries from 1960 to 1995, a series of rolling panel regressions show that there is an inflation threshold for the finance-growth relationship that lies between 13 and 25 percent. When inflation exceeds the threshold, finance ceases to increase economic growth. We also find that the level of financial depth varies inversely with inflation in low-inflation environments and that disinflation is associated with a positive effect of financial depth on growth.

Too Much Finance?
Too Much Finance?

Author: Mr.Jean-Louis Arcand

Publisher: International Monetary Fund

Published: 2012-06-01

Total Pages: 50

ISBN-13: 1475526105

DOWNLOAD EBOOK

This paper examines whether there is a threshold above which financial development no longer has a positive effect on economic growth. We use different empirical approaches to show that there can indeed be "too much" finance. In particular, our results suggest that finance starts having a negative effect on output growth when credit to the private sector reaches 100% of GDP. We show that our results are consistent with the "vanishing effect" of financial development and that they are not driven by output volatility, banking crises, low institutional quality, or by differences in bank regulation and supervision.

Financial Development, Inflation and Growth in Selected West African Countries
Financial Development, Inflation and Growth in Selected West African Countries

Author: Ibrahim Raheem

Publisher:

Published: 2015

Total Pages: 9

ISBN-13:

DOWNLOAD EBOOK

The study examined a nonlinear relationship between inflation and growth through financial development using data for Nigeria, Ghana and Cote d'Ivoire for periods between 1970 and 2010. The threshold value of inflation that could ensure positive association in the finance-growth nexus was empirically determined. Our results confirmed the existence of threshold with estimates that suggest that the threshold level of inflation is between 5% and 10% per annum for Ghana, and 15% per annum for Nigeria and Cote d' Ivoire.

What is the Optimal Rate of Inflation for Long-Run Growth? A Cross-Country Analysis
What is the Optimal Rate of Inflation for Long-Run Growth? A Cross-Country Analysis

Author: Hakan Yilmazkuday

Publisher:

Published: 2011

Total Pages: 23

ISBN-13:

DOWNLOAD EBOOK

Although the relationship between financial development and growth is almost obvious, the effect of inflation on the finance-growth nexus is still a subject of debate. In particular, what is the optimal rate of inflation for long-run growth? To answer this question, I analyze the relation between finance, inflation and growth by using a semiparametric graphical approach. I find that the optimal level of inflation that leads to higher long-run growth rates is around 10 percent. I also show that the positive effects of low inflation on growth are more apparent when there are high levels of financial depth. Finally, when both the levels of inflation and financial depth are low, the growth rate of the economy is volatile.

The Inflation-Economic Growth Nexus
The Inflation-Economic Growth Nexus

Author: Aynalem Shita

Publisher: LAP Lambert Academic Publishing

Published: 2012-07

Total Pages: 88

ISBN-13: 9783848481712

DOWNLOAD EBOOK

Over the past few decades, the nexus between inflation and economic growth have drawn extensive attention of macroeconomists, policy makers and the central bankers of both developed and developing countries. Much less agreement exists about the precise relationship between inflation and economic performance. This book has reviewed briefly theoretical and empirical findings about the relationship between inflation and economic growth. Moreover, the writer has examined the inflation - investment relationship to assess whether investment is the channel through which inflation and economic growth are related. More specifically, this book has examined their relationship using co-integration and error correction models accompanying with correlation matrix and Granger Causality test for the case of Ethiopia. This analysis should help shed some light on the nexus between inflation and economic growth especially to University students, professionals and policy makers in the area