The Effects of Inflation on Economic Growth: Lessons from Latin America
José De Gregorio
affiliation not provided to SSRN
IMF Working Paper No. 91/95
This paper investigates the relationship between inflation and long-run growth. It presents an endogenous growth model that illustrates the channels through which inflation affects growth. The model highlights the effects of inflation on the productivity of capital and the rate of capital accumulation. The reduction in growth is caused by a diversion of resources away from activities that lead to faster rates of growth toward activities associated with reducing the costs of inflation. The negative association between inflation and growth is assessed empirically for a sample group of Latin American countries.
Number of Pages in PDF File: 15
JEL Classification: E60, O42, O54working papers series
Date posted: February 15, 2006
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