Different Economies Exhibit Varying Nonlinearities Regarding when Inflation Starts to Impede Economic Growth

In this study, we observe that the impact of inflation on economic growth is subject to significant changes as the inflation rate increases. Additionally, the nonlinear patterns of such effects vary significantly between industrialized and developing economies. Our findings reveal that industrial economies experience a critical threshold of approximately 8% inflation rate before growth is significantly affected, while developing countries are impacted at 3% or lower. For developing countries, the growth costs become progressively marginal above an inflation rate of 50%. Neglecting the nonlinear aspect of this relationship can lead to underestimation of the effect of inflation on growth. Also, combining industrialized and developing economies in a single analysis may result in unreliable outcomes