Inflation variability hinders long-term economic growth, but boosts short-term prosperity.
The study looked at how changes in inflation rates can impact economic growth. They found that when inflation is unstable, it can harm long-term growth, even if only certain expenses require immediate payment. However, in the short term, inflation can actually boost growth. The researchers also discovered that fluctuating inflation rates can lead to higher average growth due to people saving more money as a precaution. Since inflation and its variability are usually linked, this can offset the negative impact of inflation on long-term growth. This helps explain why studies comparing growth and inflation rates across different countries often yield inconsistent results.