THE NON-LINEAR RELATIONSHIP BETWEEN INFLATION AND ECONOMIC GROWTH
Keywords:
Economic growth, Gross Domestic Product (GDP), inflation, sustainable economic developmentAbstract
Economic growth refers to an increase in a country's real Gross Domestic Product (GDP) over time. According to the World Bank (2023), the global average economic growth rate was 2.6% in 2022.
Inflation, on the other hand, is defined as a sustained increase in the general price level of goods and services in an economy over a period of time. The International Monetary Fund (2023) reports that the average inflation rate for advanced economies was 1.7% in 2022.
The relationship between inflation and economic growth is complex and multifaceted. According to a study by the Organisation for Economic Co-operation and Development (OECD, 2023), there is a positive relationship between low and stable inflation and strong economic growth, while high inflation can lead to lower economic growth.
References
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Tarawalie, A. B., & Kamara, F. (2022). Inflation and growth nexus: An estimate of the threshold level of inflation in Sierra Leone. Applied Economics and Finance, 9(2), 1-12.
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Nistor, P. (2014). FDI and economic growth, the case of Romania. Procedia Economics and Finance, 15, 577-582.
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