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Inflation-Growth Nexus: evidence from Panel Smooth Threshold Model analysis in different geographical region countries

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Main Authors: Jenq, Fei Chu, Siok, Kun Sek, Mohd Tahir, Ismail
Other Authors: jenqchu@gmail.com
Format: Article
Language:English
Published: Institute of Engineering Mathematics, Universiti Malaysia Perlis 2023
Subjects:
Growth
Inflation threshold
Panel smooth transition
Regression
Online Access:http://dspace.unimap.edu.my:80/xmlui/handle/123456789/77696
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spelling my.unimap-776962023-01-24T12:50:59Z Inflation-Growth Nexus: evidence from Panel Smooth Threshold Model analysis in different geographical region countries Jenq, Fei Chu Siok, Kun Sek Mohd Tahir, Ismail Jenq, Fei Chu jenqchu@gmail.com School of Mathematical Sciences, Universiti Sains Malaysia 11800 USM, Penang, Malaysia Growth Inflation threshold Panel smooth transition Regression Link to publisher's homepage at https://amci.unimap.edu.my/ The relationship between inflation-growth has long been debated and it is inconclusive if there is a trade-off between inflation and growth. The main objective of this study is to model the threshold effect of inflation on growth, in addition to testing on the existence of the trade-off relationship. For this purpose, the Panel Smooth Transition Regression (PSTR) model analysis is conducted. The results are compared among three panel groups, namely the EU, ASEAN and African countries. These three different geographical regions have different inflation experiences and country-specific characteristics separately over the period 1980–2017. Inflation is treated as the threshold variable and other variables as treated as control variables (exchange rate, trade-openness, government final consumption and population growth rate). The results reveal a nonlinear relationship between growth and inflation in all three different geographical regions. The trade-off relationship is detected in the first regime in all three panel groups. The PSTR model has detected the optimal threshold of inflation rate to be 4.17%, 6.02% and 0.94% to 14.51% respectively. Africa has a higher inflation tolerance range, 0.94 to 14.52 % compared to the EU and ASEAN groups. Overall, the inflation-growth relationship is positive (trade-off) below the reported threshold levels and the relationship is negative once the inflation rate exceeds the threshold levels. These imply that our results reveal that the relationship between inflation-growth is non-linear in the company of an existence of a threshold level of inflation. 2023-01-24T12:50:59Z 2023-01-24T12:50:59Z 2022-12 Article Applied Mathematics and Computational Intelligence (AMCI), vol.11(1), 2022, pages 1-11 2289-1315 (print) 2289-1323 (online) http://dspace.unimap.edu.my:80/xmlui/handle/123456789/77696 https://amci.unimap.edu.my/ en Institute of Engineering Mathematics, Universiti Malaysia Perlis
institution Universiti Malaysia Perlis
building UniMAP Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Malaysia Perlis
content_source UniMAP Library Digital Repository
url_provider http://dspace.unimap.edu.my/
language English
topic Growth
Inflation threshold
Panel smooth transition
Regression
spellingShingle Growth
Inflation threshold
Panel smooth transition
Regression
Jenq, Fei Chu
Siok, Kun Sek
Mohd Tahir, Ismail
Jenq, Fei Chu
Inflation-Growth Nexus: evidence from Panel Smooth Threshold Model analysis in different geographical region countries
description Link to publisher's homepage at https://amci.unimap.edu.my/
author2 jenqchu@gmail.com
author_facet jenqchu@gmail.com
Jenq, Fei Chu
Siok, Kun Sek
Mohd Tahir, Ismail
Jenq, Fei Chu
format Article
author Jenq, Fei Chu
Siok, Kun Sek
Mohd Tahir, Ismail
Jenq, Fei Chu
author_sort Jenq, Fei Chu
title Inflation-Growth Nexus: evidence from Panel Smooth Threshold Model analysis in different geographical region countries
title_short Inflation-Growth Nexus: evidence from Panel Smooth Threshold Model analysis in different geographical region countries
title_full Inflation-Growth Nexus: evidence from Panel Smooth Threshold Model analysis in different geographical region countries
title_fullStr Inflation-Growth Nexus: evidence from Panel Smooth Threshold Model analysis in different geographical region countries
title_full_unstemmed Inflation-Growth Nexus: evidence from Panel Smooth Threshold Model analysis in different geographical region countries
title_sort inflation-growth nexus: evidence from panel smooth threshold model analysis in different geographical region countries
publisher Institute of Engineering Mathematics, Universiti Malaysia Perlis
publishDate 2023
url http://dspace.unimap.edu.my:80/xmlui/handle/123456789/77696
_version_ 1772813097977774080
score 13.211869

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