Relationship between inflation and economic growth; comparative experience of Italy and Austria

Economic growth of a country is the result of monetary, fscal and other economic policies undertaken by its policy makers. Economic growth is affected by a number of factors, one of which is inflation. Te relationship between economic growth and price growth is complex one. Empirical studies have shown that the relationship between economic growth and inflation may be positive, negative and neutral. Today, there are no doubts that high inflation has a negative effect on economic growth. Te subject of newer empirical research is the lower threshold rate of annual inflation can have a signifcant negative effect on economic growth. Tis paper investigates the relationship between economic growth and inflation in Italy and Austria, countries featured by long-term low inflation. Statistical and econometric comparative analysis conducted for Italy and Austria for period between 1980 – 2016 showed that low inflation is important but not sufcient factor for economic growth.