This paper examines the impact of inflation on economic performance using data from around 100 countries over the period 1960 to 1990. The analysis finds that an increase in the average inflation rate by 10 percentage points per year leads to a reduction in the growth rate of real per capita GDP by 0.2-0.3 percentage points per year and a decrease in the investment-to-GDP ratio by 0.4-0.6 percentage points. These effects are statistically significant only when high-inflation experiences are included in the sample. While the adverse influence of inflation on growth appears small, the long-term effects on standards of living are substantial. For example, a 10 percentage point increase in the long-term average inflation rate is estimated to lower the level of real GDP after 30 years by 4-7%, which is significant enough to justify a strong interest in price stability. The paper also explores the role of various instruments, such as central bank independence, lagged inflation, and prior colonial status, in isolating the causal relationship between inflation and economic growth. The results suggest that the negative effects of inflation on growth and investment are robust and reflect a causal influence from higher long-term inflation to reduced growth and investment.This paper examines the impact of inflation on economic performance using data from around 100 countries over the period 1960 to 1990. The analysis finds that an increase in the average inflation rate by 10 percentage points per year leads to a reduction in the growth rate of real per capita GDP by 0.2-0.3 percentage points per year and a decrease in the investment-to-GDP ratio by 0.4-0.6 percentage points. These effects are statistically significant only when high-inflation experiences are included in the sample. While the adverse influence of inflation on growth appears small, the long-term effects on standards of living are substantial. For example, a 10 percentage point increase in the long-term average inflation rate is estimated to lower the level of real GDP after 30 years by 4-7%, which is significant enough to justify a strong interest in price stability. The paper also explores the role of various instruments, such as central bank independence, lagged inflation, and prior colonial status, in isolating the causal relationship between inflation and economic growth. The results suggest that the negative effects of inflation on growth and investment are robust and reflect a causal influence from higher long-term inflation to reduced growth and investment.