Abstract
Abstract. This paper analyzes the relationship between inflation and economic growth in Thailand using annual dataset during 1990 and 2015. The threshold model is estimated for different levels of threshold inflation rate. The results suggest that the threshold level of inflation above which inflation significantly slow growth is estimated at 3 percent. The negative relationship between inflation and growth is apparent above this threshold level of inflation. In other words, the inflation rate that is higher than this threshold level can jeopardize the growth rate of the country.
Keywords. Inflation, Growth, Threshold model.
JEL. C13, E31.
References
Bruno, M., & Easterly, W. (1998). Inflation crisis and long-run growth, Journal of Monetary Economics, 41(1), 3-26. doi. 10.1016/S0304-3932(97)00063-9
Burdeken, R., Denzau, A., Keil, M., Sittiyot, T., & Willett, T. (2004). When does inflation hurt economic growth? Different nonlinearities for different economies, Journal of Macroeconomics, 26(1), 169-232. doi. 10.1016/j.jmacro.2003.03.005
Chowdhury, A., & Ham, R. (2009). Inflation targeting in Indonesia: Searching for a threshold, Singapore Economic Review, 54(4), 645-655. doi. 10.1142/S021759080900346X
Esen, O., Aydin, C., & Aydin, R. (2016). Inflation threshold effect on economic growth in Turkey, Journal of Advanced Research in Law and Economics, 7(8), 1983-1993. doi. 10.14505//jarle.v7.8(22).09
Ghosh, A., & Phillips, S. (1998). Warning: Inflation may be harmful to your growth, IMF Staff Papers, 45(4), 672-710. [Retrieved from].
Hansen, B. (1999). Threshold effects in non-dynamic panels: Estimation, testing and inference, Econometrica, 93(2), 345-368. doi. 10.1016/S0304-4076(99)00025-1
Khan, M.S., & Senhadji, S.A. (2001). Threshold effects in the relationship between inflation and growth, IMF Staff Papers, 48(1), 1-21. [Retrievd from].
Lopez-Villanicencio, A., & Mignon, V. (2011). On the impact of inflation on output growth: Does the level of inflation matters?, Journal of Macroeconomics, 33(3), 455-464. doi. 10.1016/j.jmacro.2011.02.003
Mankiw, N., Romer, D., & Weil, D. (1992). A contribution to the empirics of economic growth, Quarterly Journal of Economics, 107(2), 407-437. doi. 10.2307/2118477
Mubarik, Y.A. (2005). Inflation and growth: An estimate of the threshold level of inflation in Pakistan, SBP-Research Bulletin, 1(1), 35-44.
Munir, Q., & Mansur, K. (2009). Non-linearity between inflation and GDP growth in Malaysia, Economics Bulletin, 29(3), 1555-1569. doi. 10.1353/ase.0.0049
Nasrudin, E.A. (2016). Estimation threshold inflation in Indonesia, Journal of Applied Economic Sciences, 11(7), 1380-1383.
Seleteng, M., Bittencourt, M., & van Eyden, R. (2013). Non-linearities in inflation and growth nexus in the SADC region: A panel smooth transition regression approach, Economic Modelling, 30(C), 149-156. doi. 10.1016/j.econmod.2012.09.028
Sarel, M. (1996). Nonlinear effects of inflation and economic growth, IMF Staff Papers, 43(1), 199-215.
Than, S.D. (2015). Threshold effects of inflation on growth in the ASEAN-5 countries, Journal of Economics, Finance and Administrative Sciences, 20(38), 41-48. doi. 10.1016/j.jefas.2015.01.003
