Determinants of the Inflation Rate: Evidence from Panel Data

Abstract

Abstract This study analyzes the relationship between macroeconomic factors that affect the inflation rate. Through our research, we will analyze the impact of money supply growth, economic growth, import level and export level on the inflation rate for 40 countries that we have taken. There are: 6 Latin American countries, 2 Western Balkan countries, 19 Europe countries, 10 countries of Asia, 2 countries of Africa and Australia, within 8 years, namely from 2012 to 2023. The data for the execution of the work were obtained from the World Bank as a credible institution for the publication of statistics and Trading Economics, Another important institution in terms of statistics where 320 observations which are included in the analysis, so the data of this study are second- hand data. Since we have a group of study countries, then the data type of the study is Panel. The econometric model that we used for analysis is the model with the method of small squares. The findings of this paper show that countries that increase the money supply will also face an increase in the inflation rate, so the impact of the money supply on the inflation rate is positive. In the research countries, the results show us that we have a very small difference in the average import and export, which results in a very small average economic growth.