Inflation has a measurable causal impact on economic growth
Empirical studies consistently demonstrate that inflation exerts a measurable, often non-linear or threshold-dependent causal impact on economic growth.
The retrieved literature contains multiple empirical studies (e.g., papers 0, 1, 7, and 10) utilizing cointegration, VECM, and threshold models to establish both long-run relationships and causal links between inflation and economic growth. None of the papers refute the general premise that inflation has a measurable impact, though several note that the direction or magnitude depends on specific threshold levels.
W. Adrián Risso, Edgar J. Sánchez Carrera. Inflation and Mexican economic growth: long‐run relation and threshold effects. 2009. https://doi.org/10.1108/17576380911041728
Demonstrates a significant long-run negative relationship and threshold effect where inflation impacts economic growth.
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Morlai Bangura, Joseph Ayoola Omojolaibi. Inflation-Economic Growth Nexus in Nigeria: New Evidence on Threshold Effects. 2024. https://doi.org/10.47941/ijecop.1708
Shows a non-linear threshold relationship where inflation levels dictate its impact on economic growth.
Addis AK, Xindong Y, Tianze M, Addis HK. The role of economic stability in boosting exports in COMESA: Threshold effects analysis.. 2025. https://doi.org/10.1371/journal.pone.0338636
Identifies optimal inflation thresholds and establishes that inflation levels significantly condition the impact of GDP growth and economic stability.
Mohamed Ismail Mohamed Riyath. The Causal Relationship between Inflation and Economic Growth: An Empirical Study in Sri Lanka. 2018. https://doi.org/10.5958/2249-7307.2018.00003.8
Confirms a long-run bidirectional causal relationship between inflation and economic growth in Sri Lanka.
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