Inflation anchoring and growth: The role of credit constraints

Sangyup Choi, Davide Furceri, Prakash Loungani, Myungkyu Shim

Research output: Contribution to journalArticlepeer-review

6 Citations (Scopus)


Can inflation anchoring foster growth? To answer this question, we use panel data on sectoral growth for 22 manufacturing industries from 39 advanced and emerging market economies over 1990–2014 and employ a difference-in-differences strategy based on the theoretical prediction that higher inflation uncertainty particularly depresses investment in industries that are more credit constrained. Industries characterized by high external financial dependence, liquidity needs, and R&D intensity, and low asset tangibility, tend to grow faster in countries with well-anchored inflation expectations. The results, based on an IV approach—using indicators of monetary policy transparency and central bank independence as instruments—confirm our findings.

Original languageEnglish
Article number104279
JournalJournal of Economic Dynamics and Control
Publication statusPublished - 2022 Jan

Bibliographical note

Publisher Copyright:
© 2021 Elsevier B.V.

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Control and Optimization
  • Applied Mathematics


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