The Dynamic Relationship between Inflation and Economic Growth


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  • Product Description

This study empirically assesses the relationship between inflation and economic growth in Ethiopia using quarterly dataset from 1992Q1 to 2010Q4. In doing so, an interesting policy issue arises. What is the threshold level of inflation for the Ethiopian economy? Based on the Engle-Granger and Johansen co-integration tests it is found out that there is a positive long-run relationship between inflation and economic growth. The error correction models show that in cases of short-run disequilibrium, the inflation model adjusts itself to its long-run path correcting roughly 40% of the imbalance in each quarter. In addition, based on the conditional least square technique, the estimated threshold model suggests 10% as the optimal level of inflation that facilitates growth. An inflation level higher or lower than the threshold level of inflation affects the economic growth negatively and hence fiscal and monetary policy coordination is vital to keep inflation at the threshold.

Product Specifications
SKU :COC58958
Country of ManufactureIndia
Product BrandLAP LAMBERT Academic Publishing
Product Packaging InfoBox
In The Box1 Piece
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