Omay, TolgaKan, Elif Öznur2016-06-132016-06-132010Omay, T. Kan, E.Ö. (2010). Re-examining the threshold effects in the inflation-growth nexus with cross-sectionally dependent non-linear panel: Evidence from six industrialized economies. Economic Modelling, 27(5), 996-1005. http://dx.doi.org/10.1016/j.econmod.2010.04.0110264-9993http://hdl.handle.net/20.500.12416/1081This paper analyzes the empirical relationship between inflation and output growth using a novel panel data estimation technique, Panel Smooth Transition Regression (PSTR) model, which takes account of the non-linearities in the data. By using a panel data set for 6 industrialized countries that enable us to control for unobserved heterogeneity at both country and time levels, we find that there exists a statistically significant negative relationship between inflation and growth for the inflation rates above the critical threshold level of 2.52%, which is endogenously determined. Furthermore, we also control cross-section dependency by using the CD test modified to non-linear context and remedy cross-section dependency with Seemingly Unrelated Regression Equations through Generalized Least Squares (SURE-GLS) and newly proposed Common Correlated Effects (CCE) estimation techniques. We find that these methods change the critical threshold value slightly. The estimated threshold values from these estimation methods are 3.18% and 2.42%, respectively. (C) 2010 Elsevier B.V. All rights reservedeninfo:eu-repo/semantics/closedAccessInflationGrowthThreshold EffectsPanel Smooth Transition ModelCross-section DependencyCommon Correlated EffectsArticle275996100510.1016/j.econmod.2010.04.011