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The Inflation-Economic Growth Relationship: Estimating the Inflation Threshold in Vietnam

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  • Mai, Nhat Chi

Abstract

Utilizing annual data over the period 1990–2015 and employing the threshold model developed by Sarel (1996) with some modifications, this paper estimates the inflation threshold in Vietnam and simultaneously examines the linkage between inflation and economic growth. The findings show that the estimated inflation threshold stays at 3%–4%, above which the positive effect of inflation on economic growth vanishes, and this effect starts fading at 5.5%–7.5%. The findings of this paper regarding the inflation threshold and the inflation-economic relationship are expected to help the State Bank of Vietnam (SBV) in conducting its monetary policy, especially the inflation policy. Moreover, the findings also help the government evaluate the role of the gross domestic product’s determinants in promoting the economic growth.

Suggested Citation

  • Mai, Nhat Chi, 2021. "The Inflation-Economic Growth Relationship: Estimating the Inflation Threshold in Vietnam," OSF Preprints rqbd7, Center for Open Science.
    • Handle: RePEc:osf:osfxxx:rqbd7
    DOI: 10.31219/osf.io/rqbd7
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    References listed on IDEAS

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