Inflation Dynamics and the Output‐Inflation Trade‐Off: International Panel Data Evidence

15 Pages Posted: 14 May 2020

See all articles by Dimitrios Bakas

Dimitrios Bakas

Nottingham Trent University

Georgios E. Chortareas

University of Athens - Faculty of Economics; University of Essex - Department of Accounting, Finance & Management; King's College London

Date Written: October 2019

Abstract

We explore the impact of inflation and its variability on the output‐inflation trade‐off using a single‐step approach in a panel data context. Previous empirical approaches focus on either cross‐country or country‐by‐country time‐series analyses. We employ a dynamic heterogeneous panel specification using an all‐encompassing estimation framework accounting for parameter heterogeneity, cross‐sectional dependence, dynamics, and nonstationarity. Our sample covers 60 countries from 1970 to 2010. While inflation variability reduces the trade‐off for specific periods and country groups, an unambiguous and more pronounced negative relation emerges between the inflation rate and the trade‐off. The findings are consistent with the New Keynesian view.

JEL Classification: E31, E12, C23

Suggested Citation

Bakas, Dimitrios and Chortareas, Georgios, Inflation Dynamics and the Output‐Inflation Trade‐Off: International Panel Data Evidence (October 2019). Economic Inquiry, Vol. 57, Issue 4, pp. 2110-2124, 2019, Available at SSRN: https://ssrn.com/abstract=3596393 or http://dx.doi.org/10.1111/ecin.12798

Dimitrios Bakas (Contact Author)

Nottingham Trent University ( email )

Burton Street
NG1 4BU Nottingham
United Kingdom

Georgios Chortareas

University of Athens - Faculty of Economics ( email )

8 Pesmazoglou street
GR-10559 Athens
Greece
+(30) 210 3689805 (Phone)
+(30) 210 3689810 (Fax)

University of Essex - Department of Accounting, Finance & Management ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

King's College London ( email )

Strand
London, England WC2R 2LS
United Kingdom

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
0
Abstract Views
28
PlumX Metrics