These effects kick in only when inflation is noticeably high. So it is legitimate to ask, ‘At what threshold level of inflation does it start hurting growth?’ Unfortunately, this question is hard to answer – developing countries typically have higher inflation, and developing countries also have higher growth. So one might well find a positive correlation between inflation and growth, though this does not mean more inflation causes more growth. For this reason, the literature on estimating threshold effects beyond which inflation hurts growth is both vast as well as inconclusive. Most studies
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