The Journal of Asian Finance, Economics and Business (JAFEB) 제7권 제5호 (p.91-102)

Optimal Inflation Threshold and Economic Growth: Ordinal Regression Model Analysis

키워드 :
Economic Growth,Threshold Model,Inflation Rate


1. Introduction
2. Literature Review
3. Methodology
4. Results
5. Discussion
6. Conclusions


The study investigates the relationship between the inflation rate and economic growth to find out the optimal inflation threshold for economic growth. Therefore, this study applied an ordinary least square model (OLS) and the ordinal regression model, and collected the time-series data from 1996 to 2017 to test the relationship between inflation and economic growth in the short-term and long-term. The sample fits the model and is statistically significant. The study showed that 96.6% of correlation between inflation rate and economic growth are close and 4.5% of optimal inflation threshold is appropriate for economic growth. It finds that the optimal inflation threshold is base to perform economic growth, besides the inflation rate is positively related to economic growth. The results support the monetary policy appropriately. This study identifies issues for Government to consider: have a comprehensive solution among macroeconomic policies, monetary policy, fiscal policy and other policies to control and maintain the inflation and stimulate growth; have appropriate policies to regulate inflation to stimulate economic growth over the long term; set a priority goal for sustainable economic growth; not pursue economic growth by maintaining the inflation rate in the long term, but take appropriate measures to stabilize the inflation at the optimal inflation threshold.