The impact of inflation towards economic growth : International evidence / Prisley Ricco John

Increasing trend of economic growth is essential to a country as it will enable the
country to become a well-developed country. However, there are many external
factors that can affect the economic growth and one of it is inflation. Inflation is the
uncontrolled continuous increase in general price level in a long period of time. In this
paper, researcher is trying to investigate the impact of inflation towards economic
growth. To further the understanding, researcher also tries to identify the relationship
between inflation and economic growth and determine whether there are significant
differences between the impact of inflation towards the economic growth in
developing and developed countries. To do so, researcher use panel data model with
50 observations with 10 years period. From the results, researcher found that inflation
has mild impact towards the economic growth in developing country, which is only
2%. However, the impact of inflation towards the economic growth in developed
country is higher than in developing country, which is at 11%. Researcher also found
that there is significant difference between the impact of inflation towards the
economic growth in developing and developed country. By referring to the main
objective, researcher found that the difference is significantly noticeable. The
difference of impact between developing and developed country is almost 9%. The
percentage obviously show that the impact of inflation very different between both
development level.