Economics, Econometrics and Finance
4 years ago

High inflation rates hinder economic growth and investment, keep it below 6%!

MPRA Paper
Investment, inflation and economic growth nexus
Iqbal Nasir, Saima Nawaz

Paper Summary

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The article explores how inflation affects economic growth and investment in Pakistan. It finds that there are two threshold levels for inflation (6% and 11%) where the impact on economic growth changes. Inflation below 6% has a positive but small effect on growth, while higher rates have a strong negative impact. For investment, inflation above 7% has a significant negative effect. Keeping inflation below 6% is recommended for better economic growth and investment.