Cyclical and Causal Patterns of Inflation and GDP Growth

Empirical foundations for the view that high inflation impairs GDP growth are <p> examined using annual data for 115 countries over the period 1960-1995. <p> Taking into account country heterogeneity and time-specific symmetric shocks, <p> as well as endogeneity of inflation and dynamics of GDP growth we estimate <p> dynamic panel-data models of the effects of inflation on growth. We find no <p> evidence supporting the view that inflation is in general harmful to GDP <p> growth. On the other hand, there is a negative correlation between <p> contemporaneous intra-country inflation and growth for periods characterised <p> by positive oil-price shocks.