DOES INFLATION AFFECT THE RELATIONSHIP BETWEEN BROAD MONEY AND ECONOMIC GROWTH? A THRESHOLD MODEL

• Authors: Šuliková Veronika , Siničáková Marianna , Štiblárová Ľubica
• Languages of publication: EN

Abstracts

EN

This study empirically examines the relationship between broad money (M3) and economic growth according to different level of inflation. The impact is examined on the sample of 17 countries via threshold model for panel data. To ensure the robustness of the results, we apply several alternatives, including single and double threshold model. We conclude that an increase in money supply can be beneficial from the point of view of economic growth only for countries susceptible to maintain their inflation within an optimum interval, which is quantified by our model at around 2% level of inflation in the long run. Further the model estimation revealed that countries with inflation over 3.3% should avoid an increase in money supply as they risk negative effects on their output.

Keywords

EN

BROAD MONEY; ECONOMIC GROWTH; INFLATION; THRESHOLD MODEL

• Publisher: Institute of Slovak and World Economics and Institute for Forecasting, Slovak Academy of Sciences
• Journal: Ekonomický časopis (Journal of Economics)
• Year: 2019
• Volume: 67
• Issue: 6
• Pages: 569 – 586

Contributors

author

Šuliková Veronika

• Technical University of Košice, Faculty of Economics, Němcovej 32, 040 01 Košice, Slovak Republic

author

Siničáková Marianna

author

Štiblárová Ľubica