The relationship between inflation and growth discrete cycles: Peru 1993 - 2012

This study verifies the hypothesis of a non-linear relationship between inflation and short-run economic growth in Peru with data that covers the period January 1993 - June 2012. The paper uses a family of dichotomic models about the relationship between acceleration and deceleration phases on the dynamics of both inflation and growth. One-equation autoregressive logit models as well as static and autoregressive binary probit models are estimated. Results suggest the existence of a positive stochastic relationship between inflation and growth discrete cycles.