TITLE:
Inflation Effects on Finance-Growth Link: A Panel Smooth Transition Approach
AUTHORS:
Mostafa Sargolzaei, Mohammad Mahdi Bahrololoum
KEYWORDS:
Credit Provided by Banking, Credit to Private, Economic Growth, PSTR, OPEC Economies
JOURNAL NAME:
American Journal of Industrial and Business Management,
Vol.9 No.9,
September
19,
2019
ABSTRACT: Considering the effect of inflation on financial development and economic
growth, in this paper we investigate the role of inflation in the effect of financial
development on the economic growth in OPEC economies for the period
of 1970 to 2015. For this purpose, we used Panel Smooth Threshold Regression
(PSTR) to estimate nonlinear effects of inflation in the relation between
economic growth and financial development. The results of estimation show
that the thresholds of inflation rate were 20.33 and 20.36 considering the two
different proxies of financial development (domestic credit provided by banking
and domestic credit to private sector). The results of nonlinear estimation
showed that in over-threshold inflations, the effect of financial development
on the economic growth in the OPEC economies would decrease and would
even become negative.