Does Inflation Slow Long-Run Growth in India?

Does Inflation Slow Long-Run Growth in India?

This paper examines the long-run relationship between consumer price index industrial workers (CPI-IW) inflation and GDP growth in India. We collect data on a sample of 14 Indian states over the period 1989�2013, and use the cross-sectionally augmented distributed lag (CSDL) approach of Chudik et al...

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1. Verfasser: Mohaddes, Kamiar (VerfasserIn)
Format: Elektronisch E-Book
Sprache:English
Veröffentlicht: Washington, D.C International Monetary Fund 2014
Schriftenreihe:IMF Working Papers: Working Paper No. 14 / 222
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Zusammenfassung:This paper examines the long-run relationship between consumer price index industrial workers (CPI-IW) inflation and GDP growth in India. We collect data on a sample of 14 Indian states over the period 1989�2013, and use the cross-sectionally augmented distributed lag (CSDL) approach of Chudik et al. (2013) as well as the standard panel ARDL method for estimation�to account for cross-state heterogeneity and dependence, dynamics and feedback effects. Our findings suggest that, on average, there is a negative long-run relationship between inflation and economic growth in India. We also find statistically-significant inflation-growth threshold effects in the case of states with persistently-elevated inflation rates of above 5.5 percent. This suggest the need for the Reserve Bank of India to balance the short-term growthinflation trade-off, in light of the long-term negative effects on growth of persistently-high inflation
Beschreibung:1 Online-Ressource (19 p)
ISBN:1498399983
9781498399982

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