Inflation and Its Effect on Indian Economy
The relationship between inflation and growth remains a controversial one in both theory and empirical findings. Originating in the Latin American context in the 1950s, the issue has generated an enduring debate between structuralists and monetarists. The structuralists believe that inflation is essential for economic growth, whereas the monetarists see inflation as detrimental to economic progress. There are two aspects to this debate: (a) the nature of the relationship if one exists and (b) the direction of causality. Friedman summarized the inconclusive nature of the relationship between inflation and economic growth as follows: ―historically, all possible combinations have occurred: inflation with and without development, no inflation with and without development.