> > I think that even World Bank economists concede that inflation
> > doesn't become a serious problem until it gets over 10%. What they
> > don't say is that an economy experiencing >10% inflation is generally
> > one suffering from serious problems - e.g. political crisis,
> > structural decline, unresolved class conflict - of which the
> > inflation is more a symptom than a cause.
> >
> Stiglitz has vacillated on this question. On some occasions, he has
>put the figure at 40%.
Here's one reason why: <http://www.worldbank.org/html/prdmg/grthweb/abseabr4.htm>. It was published in 1998 * Journal of Monetary Economics 41 (1): 3-26, so the text isn't available on teh WB site. But here's the abstract:
>Inflation Crises and Long-Run Growth
>by Michael Bruno and William Easterly
>
>Abstract
>
>Recent articles in the new growth literature find that growth and
>inflation are negatively related, a finding that is usually thought
>to reflect a long run relationship. But the inflation-growth
>correlation is only present with high frequency data and with
>extreme inflation observations: there is no cross-sectional
>correlation between long-run averages of growth and inflation. We
>propose that examination of discrete high inflation crises (periods
>when inflation is above some threshold, which we propose to be 40
>percent annual) helps unravel these empirical paradoxes. We
>establish a robust finding that growth falls sharply during discrete
>high inflation crises, then recovers surprisingly strongly after
>inflation falls.
Doug