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Inflation, Disinflation, and Growth Atish R. Ghosh

Inflation, Disinflation, and Growth

Atish R. Ghosh

Published May 1st 1998
ISBN : 9786613882141
ebook
45 pages
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 About the Book 

Rapid output growth and low inflation are the most common objectives of macroeconomic policy. It is rather surprising, therefore, that a consensus about the relationship between these two variables is yet to emerge. While early studies by PhillipsMoreRapid output growth and low inflation are the most common objectives of macroeconomic policy. It is rather surprising, therefore, that a consensus about the relationship between these two variables is yet to emerge. While early studies by Phillips (1958) suggested an exploitable trade-off between output and price stability, the stagflationary experience of the industrialized countries in the 1970s belied this finding and showed that, beyond the short-run, any such trade-off is illusory. More recent cross-country studies, particularly those which include middle- and low- income countries in their samples, suggest a negative relationship between growth and inflation.1 Even among these studies, however, there is little agreement on whether the empirical association of lower inflation with faster growth is statistically and economically significant, let alone causal.2