Economic

This paper re-examines the relationship between ination, ination volatility and growth using cross-country panel data for the past 30 years. With regard to the level of ination, we nd that in contrast to current ndings which are based on cross-sectional time-average regression comparisons, exploiting the time dimension of the data reveals a strong negative correlation between ination and income growth for all but very low ination countries. To examine the role of ination uncertainty on growth, we use intra-year ination data to construct an annual measure of ination volatility. Using this measure, we nd that ination volatility is also robustly negatively correlated with growth even after the eect of the level of ination is controlled for.