Inflation and Output Volatility: Evidence from International Historical Data

In: CESifo economic studies: a joint initiative of the University of Munich's Center for Economic Studies and the Ifo Institute, Band 66, Heft 2, S. 157-180

Abstract

Abstract
This study adopts a historical perspective to investigate variations in output volatility within and across world economies. The analysis uses annual data for 37 OECD and non-OECD countries covering the last two centuries. We focus on the relationship between inflation and output volatility. The results of a panel analysis show a positive effect of inflation on output volatility. This finding is consistent with the view that low inflation has a stabilizing effect on output volatility over the long term.