The Relationship Between Inflation and Economic Growth: A Further Evidence

Abdulaziz Hamad Algaeed

doi:doi:10.11648/j.jwer.20160505.13

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The Relationship Between Inflation and Economic Growth: A Further Evidence

Abdulaziz Hamad Algaeed

Published in Journal of World Economic Research (Volume 5, Issue 5)

Received: 6 September 2016 Accepted: 18 September 2016 Published: 9 October 2016

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Abstract

This paper focuses on exploring the relationship between inflation and economic growth in Saudi Arabia. The real growth of non-oil measure is used as a dependent variable, whereas wholesale price is implemented as a proxy for inflation. This study covers the period of 1985-2015. The short and long-run relationships are estimated using co-integration techniques. The results support the existence of positive effects of inflation over economic growth. The threshold level of inflation for non-oil GDP is around a 10 percent. In addition, the long-run causality is running from inflation to real growth of non-oil GDP. The impulse responses test points out that future responsiveness of growth due to impulse of inflation is negative and significant after a year and a half. Whereas, the inflation responsiveness due to a shock in growth is effective positively after three years and a half in the future.

Published in	Journal of World Economic Research (Volume 5, Issue 5)
DOI	10.11648/j.jwer.20160505.13
Page(s)	65-71
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2016. Published by Science Publishing Group

Keywords

Non-oil GDP, Saudi Arabia, Co-integration Analysis, Causality, Inflation

References

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Abdulaziz Hamad Algaeed. (2016). The Relationship Between Inflation and Economic Growth: A Further Evidence. Journal of World Economic Research, 5(5), 65-71. https://doi.org/10.11648/j.jwer.20160505.13

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ACS Style

Abdulaziz Hamad Algaeed. The Relationship Between Inflation and Economic Growth: A Further Evidence. J. World Econ. Res. 2016, 5(5), 65-71. doi: 10.11648/j.jwer.20160505.13

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AMA Style

Abdulaziz Hamad Algaeed. The Relationship Between Inflation and Economic Growth: A Further Evidence. J World Econ Res. 2016;5(5):65-71. doi: 10.11648/j.jwer.20160505.13

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@article{10.11648/j.jwer.20160505.13,
  author = {Abdulaziz Hamad Algaeed},
  title = {The Relationship Between Inflation and Economic Growth: A Further Evidence},
  journal = {Journal of World Economic Research},
  volume = {5},
  number = {5},
  pages = {65-71},
  doi = {10.11648/j.jwer.20160505.13},
  url = {https://doi.org/10.11648/j.jwer.20160505.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20160505.13},
  abstract = {This paper focuses on exploring the relationship between inflation and economic growth in Saudi Arabia. The real growth of non-oil measure is used as a dependent variable, whereas wholesale price is implemented as a proxy for inflation. This study covers the period of 1985-2015. The short and long-run relationships are estimated using co-integration techniques. The results support the existence of positive effects of inflation over economic growth. The threshold level of inflation for non-oil GDP is around a 10 percent. In addition, the long-run causality is running from inflation to real growth of non-oil GDP. The impulse responses test points out that future responsiveness of growth due to impulse of inflation is negative and significant after a year and a half. Whereas, the inflation responsiveness due to a shock in growth is effective positively after three years and a half in the future.},
 year = {2016}
}

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TY  - JOUR
T1  - The Relationship Between Inflation and Economic Growth: A Further Evidence
AU  - Abdulaziz Hamad Algaeed
Y1  - 2016/10/09
PY  - 2016
N1  - https://doi.org/10.11648/j.jwer.20160505.13
DO  - 10.11648/j.jwer.20160505.13
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 65
EP  - 71
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20160505.13
AB  - This paper focuses on exploring the relationship between inflation and economic growth in Saudi Arabia. The real growth of non-oil measure is used as a dependent variable, whereas wholesale price is implemented as a proxy for inflation. This study covers the period of 1985-2015. The short and long-run relationships are estimated using co-integration techniques. The results support the existence of positive effects of inflation over economic growth. The threshold level of inflation for non-oil GDP is around a 10 percent. In addition, the long-run causality is running from inflation to real growth of non-oil GDP. The impulse responses test points out that future responsiveness of growth due to impulse of inflation is negative and significant after a year and a half. Whereas, the inflation responsiveness due to a shock in growth is effective positively after three years and a half in the future.
VL  - 5
IS  - 5
ER  -

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Author Information

Abdulaziz Hamad Algaeed

Department of Economics, College of Economics and Administrative Sciences, Imam Mohamed bin Saud Islamic University, Riyadh, Saudi Arabia

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Abdulaziz Hamad Algaeed. (2016). The Relationship Between Inflation and Economic Growth: A Further Evidence. Journal of World Economic Research, 5(5), 65-71. https://doi.org/10.11648/j.jwer.20160505.13

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ACS Style

Abdulaziz Hamad Algaeed. The Relationship Between Inflation and Economic Growth: A Further Evidence. J. World Econ. Res. 2016, 5(5), 65-71. doi: 10.11648/j.jwer.20160505.13

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AMA Style

Abdulaziz Hamad Algaeed. The Relationship Between Inflation and Economic Growth: A Further Evidence. J World Econ Res. 2016;5(5):65-71. doi: 10.11648/j.jwer.20160505.13

Copy | Download

@article{10.11648/j.jwer.20160505.13,
  author = {Abdulaziz Hamad Algaeed},
  title = {The Relationship Between Inflation and Economic Growth: A Further Evidence},
  journal = {Journal of World Economic Research},
  volume = {5},
  number = {5},
  pages = {65-71},
  doi = {10.11648/j.jwer.20160505.13},
  url = {https://doi.org/10.11648/j.jwer.20160505.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20160505.13},
  abstract = {This paper focuses on exploring the relationship between inflation and economic growth in Saudi Arabia. The real growth of non-oil measure is used as a dependent variable, whereas wholesale price is implemented as a proxy for inflation. This study covers the period of 1985-2015. The short and long-run relationships are estimated using co-integration techniques. The results support the existence of positive effects of inflation over economic growth. The threshold level of inflation for non-oil GDP is around a 10 percent. In addition, the long-run causality is running from inflation to real growth of non-oil GDP. The impulse responses test points out that future responsiveness of growth due to impulse of inflation is negative and significant after a year and a half. Whereas, the inflation responsiveness due to a shock in growth is effective positively after three years and a half in the future.},
 year = {2016}
}

Copy | Download

TY  - JOUR
T1  - The Relationship Between Inflation and Economic Growth: A Further Evidence
AU  - Abdulaziz Hamad Algaeed
Y1  - 2016/10/09
PY  - 2016
N1  - https://doi.org/10.11648/j.jwer.20160505.13
DO  - 10.11648/j.jwer.20160505.13
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 65
EP  - 71
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20160505.13
AB  - This paper focuses on exploring the relationship between inflation and economic growth in Saudi Arabia. The real growth of non-oil measure is used as a dependent variable, whereas wholesale price is implemented as a proxy for inflation. This study covers the period of 1985-2015. The short and long-run relationships are estimated using co-integration techniques. The results support the existence of positive effects of inflation over economic growth. The threshold level of inflation for non-oil GDP is around a 10 percent. In addition, the long-run causality is running from inflation to real growth of non-oil GDP. The impulse responses test points out that future responsiveness of growth due to impulse of inflation is negative and significant after a year and a half. Whereas, the inflation responsiveness due to a shock in growth is effective positively after three years and a half in the future.
VL  - 5
IS  - 5
ER  -

Copy | Download