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The Growth-Inflation Nexus for the US over 1801-2013: A Semiparametric Approach

Author

Listed:
  • Mehmet Balcilar

    (Department of Economics, Eastern Mediterranean University, Famagusta, Northern Cyprus , via Mersin 10, Turkey)

  • Rangan Gupta

    (Department of Economics, University of Pretoria)

  • Charl Jooste

    (Department of Economics, University of Pretoria)

Abstract

We try and detect whether there exists a threshold level of inflation for the US economy over 1801-2013, beyond which it has a negative effect on economic growth. We use a combination of nonparametric (NP) and instrumental variable semiparametric (SNP-IV) methods to obtain inflation thresholds for the United States. The results suggest that the relationship between growth and inflation is hump shaped—that higher levels of inflation reduce growth more. Our results consistently show that inflation above two per cent negatively affects growth.

Suggested Citation

  • Mehmet Balcilar & Rangan Gupta & Charl Jooste, 2014. "The Growth-Inflation Nexus for the US over 1801-2013: A Semiparametric Approach," Working Papers 201447, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:201447
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    References listed on IDEAS

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    Cited by:

    1. Mehmet Balcilar & Shinhye Chang & Rangan Gupta & Stephen M. Miller, 2018. "The relationship between the inflation rate and inequality across U.S. states: a semiparametric approach," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(5), pages 2413-2425, September.

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    More about this item

    Keywords

    Inflation; growth; nonparametric; semiparametric;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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