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Optimal inflation? -Inflation-tillväxtrelationen omprövad

Zilling, Jennifer LU (2018) NEKH01 20181
Department of Economics
Abstract
This study reconsiders the consensus regarding low inflation being optimal for economic growth. By studying four industrialized countries over a longer period of time (1870-2016) deflation data is taken into account, something previous research has ignored. The empirical result rejects the two percent inflation target set by many central banks. While the model suggests that optimal inflation for GDP growth is no inflation, but rather some rate of deflation, this result is found to be sensitive to the exclusion of high inflation observations. If these outliers are excluded the model fails to justify a robust relationship regarding inflation and growth. Taking this sensitivity into account, no optimal level of inflation or deflation is found.
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author
Zilling, Jennifer LU
supervisor
organization
course
NEKH01 20181
year
type
M2 - Bachelor Degree
subject
keywords
inflation, deflation, economic growth
language
Swedish
id
8943650
date added to LUP
2018-07-05 11:26:30
date last changed
2018-07-05 11:26:30
@misc{8943650,
  abstract     = {This study reconsiders the consensus regarding low inflation being optimal for economic growth. By studying four industrialized countries over a longer period of time (1870-2016) deflation data is taken into account, something previous research has ignored. The empirical result rejects the two percent inflation target set by many central banks. While the model suggests that optimal inflation for GDP growth is no inflation, but rather some rate of deflation, this result is found to be sensitive to the exclusion of high inflation observations. If these outliers are excluded the model fails to justify a robust relationship regarding inflation and growth. Taking this sensitivity into account, no optimal level of inflation or deflation is found.},
  author       = {Zilling, Jennifer},
  keyword      = {inflation,deflation,economic growth},
  language     = {swe},
  note         = {Student Paper},
  title        = {Optimal inflation? -Inflation-tillväxtrelationen omprövad},
  year         = {2018},
}