Threshold Effect of Inflation on Growth: Evidence from MENA Region

The nature of the relationship between inflation and growth is highlighted in the present study conducted for a set of nineteen MENA countries using annual data for the period [1961-2010]. A threshold effect is detected empirically through a negative and significant impact of inflation on growth above a threshold of about 10 percent. To achieve this task, non-linearity of the relationship between inflation and growth is investigated through a dynamic panel threshold model. Our results are comparable to empirical studies for developing countries.  

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