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Title: Growth-Inflation nexus in USA: A Threshold Regression Approach
Other Titles: ANWESHAN, Vol. 5, No. 1, March 2017, p 34 - 52
Authors: Bhowmik, Debesh
Biswas, Debasish
Mitra, Debabrata
Keywords: Inflation
Economic growth
Granger Causality
Vector Error Correction
Monetary policy
Issue Date: Mar-2017
Publisher: University of North Bengal
Abstract: The paper endeavors to find out the nature of inflation of USA during 1961-2015 and to find out the nexus between inflation and growth using Granger causality, Johansen co-integration and vector error correction models. It also showed threshold limit of inflation of 1.75-3.0 per cent in USA using GDP deflator as inflation and taking World Bank Data. It finds one structural break at 1992 and no random walk with drift. Growth inflation nexus is negative. They are co-integrated and showed unidirectional causality. Error correction process is very fast and significant but vector error correction model is stable but divergent. Federal Reserve Bank is in favour of fiscal and monetary policy reforms to curb inflation.
ISSN: 2321-0370
Appears in Collections:Vol. 5 No. 1 (March 2017)

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