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Does Inflation Slow Long-Run Growth in India?, Kamiar Mohaddes, Mehdi Raissi

This paper examines the long-run relationship between consumer price index industrial workers (CPI-IW) inflation and GDP growth in India. We collect data on a sample of 14 Indian states over the period 1989–2013, and use the cross-sectionally augmented distributed lag (CSDL) approach of Chudik et al. (2013) as well as the standard panel ARDL method for estimation—to account for cross-state heterogeneity and dependence, dynamics and feedback effects. Our findings suggest that, on average, there is a negative long-run relationship between inflation and economic growth in India. We also find statistically-significant inflation-growth threshold effects in the case of states with persistently-elevated inflation rates of above 5.5 percent. This suggest the need for the Reserve Bank of India to balance the short-term growthinflation trade-off, in light of the long-term negative effects on growth of persistently-high inflation
Table Of Contents
Cover; Contents; I. Introduction; II. Literature Review; III. Empirical Results; A. Data sources; B. Long-Run Estimates; Tables; 1. List of the 14 States in Our Sample; Figures; 1. Real GDP Growth and Inflation, 1989-2013; 2. Real GDP Growth and Inflation by State, 1989-2013; 2. Fixed Effects (FE) and Mean Group (MG) Estimates of the Long-Run Effects Based on the ARDL Approach, 1989-2013; C. Inflation Threshold Effects on Growth; 3. Mean Group (MG) Estimates of the Long-Run Effects Based on the CS-DL approach, 1989-2013; IV. Concluding Remarks
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (20 p.)
Specific Material Designation
Form Of Item

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