Inflation variability and the relationship between inflation and growth

We examine the effect of inflation variability and economic growth using annual historical
data on both developing and developed countries. The data cover 182 developing countries
and 31 developed countries for the period 1961-2009. Proxying inflation variability by the
five-year coefficient of variation of inflation, we obtain the following results: (1) For
developing countries, there is significant evidence to suggest that when the rate of inflation
exceeds 10 percent inflation variability has a negative effect on economic growth. (2) For
developed countries, there is no significant evidence that inflation variability is detrimental to
growth.