The relationship between inflation and gross domestic product: Albania case

Abstract

This paper shows the relationship between inflation and gross domestic product (GDP) and their effects on the country’s economy, as well as changes that have occurred in the economic growth of our country by studying the changes in GDP and inflation. In this paper, we make an attempt to understand what happens to GDP when it encounters problems, such as inflation, in the development and growth phases and what government policies are chosen in this regard. In the economy of our country there are several external factors that influence, but what is important is that even though the present situation lays out controlled inflation, there is, however, an incentive for economic growth. Through the analytical studies we show that in the current economy, there is an increase in GDP generated not only from the increase in prices but from an increase in production, consumer consumption, and development of markets and investments, and this impact may not appear directly but after a period of time, two years or more. The important issue is upholding sustainable development of the country’s economy. This remains the economic objective to manage economic problems, simultaneously promoting stability and economic growth in our country.