Analysis of the effect of inflation on economic growth in CI
Analysis of the short and long term dynamics of inflation on economic growth
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This study analyzes the effect of inflation on economic growth in Côte d'Ivoire in an economic context marked by rising inflation. Specifically, the study seeks to analyze the short- and long-term effects of inflation on economic growth and verify the existence of a possible inflation threshold. The database used comes from the World Bank and covers the period from 1960 to 2020. An Autoregressive Lagged Model (ARDL) in which the CPI variable is squared to capture the possible threshold was used. Our analysis revealed that inflation has a positive effect on growth in the short run. However, in...
This study analyzes the effect of inflation on economic growth in Côte d'Ivoire in an economic context marked by rising inflation. Specifically, the study seeks to analyze the short- and long-term effects of inflation on economic growth and verify the existence of a possible inflation threshold. The database used comes from the World Bank and covers the period from 1960 to 2020. An Autoregressive Lagged Model (ARDL) in which the CPI variable is squared to capture the possible threshold was used. Our analysis revealed that inflation has a positive effect on growth in the short run. However, in the long run, inflation has a double effect on growth. Thus, there is a non-linear relationship between inflation and growth in the Ivorian economic context, in other words, there is an optimal inflation threshold in the long term that ensures sustainable economic growth in Côte d'Ivoire. This threshold is 7.5%, below which any expansionary monetary policy would promote growth and above which inflation would have negative effects.
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