Moderate Inflation and the Deflation-Depression Link : Supplemental Files, Working Paper 2006-32

Benhabib, Jess, 1948-; Spiegel, Mark M.

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Moderate Inflation and the Deflation-Depression Link : Supplemental Files, Working Paper 2006-32

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Moderate Inflation and the Deflation-Depression Link : Supplemental Files, Working Paper 2006-32

DATE: October 2006

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ABSTRACT: In a recent paper, Atkeson and Kehoe (2004) demonstrated the lack of a robust empirical relationship between inflation and growth for a cross-section of countries with 19th and 20th century data, concluding that the historical evidence only provides weak support for the contention that deflation episodes are harmful to economic growth. In this paper, we revisit this relationship by allowing for inflation and growth to have a nonlinear specification dependent on inflation levels. In particular, we allow for the possibility that high inflation is negatively correlated with growth, while a positive relationship exists over the range of negative-to-moderate inflation. Our results confirm a positive relationship between inflation and growth at moderate inflation levels, and support the contention that the relationship between inflation and growth is non-linear over the entire sample range.

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Federal Reserve Bank of San Francisco. "Moderate Inflation and the Deflation-Depression Link : Supplemental Files, Working Paper 2006-32" in Working Papers (Federal Reserve Bank of San Francisco) (October 2006). https://fraser.stlouisfed.org/title/7038/item/639749/content/xls/frbsf_pacificBasin_wp2006-32_BS_Inflation_data, accessed on March 16, 2025.

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NOTE: Supplemental files include workbook with description of methodology and raw data.

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