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MONETARY POLICY, BANKING, AND GROWTH
Author(s) -
HASLAG JOSEPH H.
Publication year - 1998
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1998.tb01730.x
Subject(s) - economics , inflation (cosmology) , inflation rate , real interest rate , monetary economics , monetary policy , per capita , macroeconomics , econometrics , population , physics , demography , sociology , theoretical physics
There is ample empirical evidence suggesting that countries with high inflation tend to grow slower than countries with low inflation. Based on the regression evidence, the inflation‐rate effect is fairly large; on average, per‐capita real GDP grows between 1/4‐ and 3/4‐ percentage‐points slower in a country in which the average inflation rate is 10% as compared with a country in which inflation is 0%. The purpose of this paper is to determine whether a model economy that is reasonably calibrated can account for such large inflation‐rate effects. The answer is yes. ( JEL O41, E58)