ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Anupam DasSubscribe to Anupam Das

Non-linear Relationship between Inflation and Growth in Developing Countries

While the orthodox consensus is that there is no trade-off between inflation and output in the long run, there is no unanimity on the short-run effect of inflation on economic growth. We attempt to estimate the non-linear relationship between inflation and economic growth for 54 developing countries over the 1971-2010 period. Our results suggest a positive association between inflation and gross domestic product growth up to a rough inflation threshold; we did this separately for Asia, Latin America and the Caribbean, and Sub-Saharan Africa. The threshold rate of inflation is found to be 23.5% for Latin America and the Caribbean, approximately 11% for Asia, and 23.6% for Sub-Saharan Africa. These results have important policy implications for developing countries, which often struggle to find the right balance between low inflation and high economic growth.

Has Globalisation Flattened the Phillips Curve?

This paper seeks, theoretically as well as empirically, to argue that one of the most important effects of globalisation has been on the working class of the advanced capitalist countries. While the workers in the South have always had a vulnerable position due to their weak bargaining position, the process of globalisation has weakened the working class of the North as their incomes get tethered to their comrades in the South. The reserve armies of labour cannot anymore be considered just "national", they should instead be seen as part of a "global" reserve army of labour.

Inflation Targeting in Developing Countries

Building on the literature to construct a theoretical argument for the shape of the Phillips curve in the context of developing economies, this paper argues that a theoretical apparatus that may be valid for advanced countries will not apply to other nations that face structural problems. It tests the validity of the argument empirically in five south Asian developing economies - Bangladesh, India, Nepal, Pakistan and Sri Lanka - and finds that it stands up to scrutiny.
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