Abstract

ACEVES MEJIA, Mario  and  ABSALON COPETE, Carlos. Inflation and Growth, a Non-Linear Relationship Between Different Economies. Rev. mex. econ. finanz [online]. 2024, vol.19, n.3, e988.  Epub Oct 15, 2024. ISSN 2448-6795.  https://doi.org/10.21919/remef.v19i3.988.

Objective: review some theoretical fundamentals and at the same time carry out empirical tests that support Thirlwall's (1974) approach in which he considered the existence of an optimal inflation rate that can accelerate the process of economic growth. Method: Time series models of nonlinear estimation of heteroscedasticity and consistent autocorrelation of autoregressive error correction are used. Results: the countries in the sample have an optimal inflation threshold higher than their current inflation target. The main limitation is the lack of statistical data for a larger set of countries, especially developing ones, as well as the lack of statistical significance with the use of certain econometric modeling structures. The main contribution and originality of the work lies in the use of econometric models that simulate the equalization between the guaranteed growth rate with respect to the natural one, allowing us to identify that it is sensible to consider that the inflation of various economies cannot be found exclusively in reduced ranges.

Keywords : Inflation; economic growth; Central Banks; monetary policy.

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