Empirical Economics

, Volume 54, Issue 3, pp 913–944 | Cite as

Inflation–growth nexus: evidence from a pooled CCE multiple-regime panel smooth transition model

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Abstract

This paper analyses the empirical relationship between inflation and growth using a panel data estimation technique, multiple-regime panel smooth transition regression, which takes into account the nonlinearities in the data. By using a panel data set for 10 countries in the Southern African Development Community permitting us to control for unobserved heterogeneity at both country and time levels, we find that a statistically significant negative relationship exists between inflation and growth for inflation rates above the critical threshold levels of 12 and 32% which are endogenously determined. Furthermore, we remedy the cross-section dependence with the common correlated effects estimator.

Keywords

Inflation Growth Threshold effects Multiple-regime panel smooth transition regression model Cross-section dependence Common correlated effects 

JEL Classification

C33 E31 O40 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2017

Authors and Affiliations

  1. 1.Department of EconomicsAtılım Universityİncek, GölbaşıTurkey
  2. 2.Department of EconomicsUniversity of PretoriaPretoriaSouth Africa

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