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AbstractThe paper examines the effect of inflation on growth in transition countries. It presents panel data evidence for 13 transition countries over the 1990–2003 period; it uses a fixed effects panel approach to account for possible bias from correlations among the unobserved effects and the observed country heterogeneity. The results find a strong, robust, negative effect on growth of inflation or its standard deviation, and one that appears to decline in magnitude as the inflation rate increases, as seen for OECD countries. And the results include a role for a normalized money demand in affecting growth, as well as for a convergence variable, a trade variable and a government share variable. Robustness of the baseline single‐equation model is examined by expanding this into a three‐equation simultaneous system of output growth, inflation and money demand that allows for possible simultaneity bias in the baseline model.

The paper examines the effect of inflation on growth in transition countries. It presents panel data evidence for 13 transition countries over the 1990-2003 period; it uses a fixed effects panel approach to account for possible bias from correlations among the unobserved effects and the observed country heterogeniety. The results find a strong, robust, negative effect on growth of inflation or its standard deviation, and one that appears to decline in magnitude as the inflation rate increases, as seen for OECD countries. And the results include a role for a normalized money demand in affecting growth, as well as for a convergence variable, a trade variable and a government share variable. And robustness of the baseline single equation model is examined by expanding this into a three equation simultaneous system of output growth, inflation and money demand that allows for possible simultaneity bias in the baseline model.

The paper examines the effect of inflation on growth in transition countries. It presents panel data evidence for 13 transition countries over the 1990-2003 period; it uses a fixed effects, full-information maximum likelihood, panel approach to account for possible bias from correlations among the unobserved effects and the observed country heterogeniety. The results find a strong, robust, negative effect on growth, and one that declines in magnitude as the inflation rate increases. These results include a role for a normalized money demand, by itself and as part of a nonlinearity in the inflation-growth effect. And these results derive from both a baseline single equation model and one that is then expanded into a three equation simultaneous system. This allows for possible simultaneity bias in the baseline model.

We examine the dissent voting record of the Bank of England Monetary Policy Committee. Contrary to findings in the FOMC literature (for example Havrilesky and Schweitzer in The Political Economy of American Monetary Policy, pp. 197--210, 1990; Chappell et al. in Q. J. Econ. 108(1):185--218, 1993), the effects of members' career backgrounds and the political channel of appointment on voting behavior are negligible, reflecting the distinct institutional constraints and incentives associated with UK monetary policy. Our findings also suggest that literature which characterizes voting behavior as being predominantly determined by members' internal or external status is overly simplistic. This view is supported by econometric results appertaining to the introduction of member-specific fixed-effects, which account for possible unobserved heterogeneity. Adapted from the source document.