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The Impact of Inflation on Economic Growth: The Case of Eurozone

Author

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  • Nexhat Kryeziu

    (University of Prishtina, Prishtina, Kosovo)

  • Esat Durguti

    (Economic Faculty & College for International Management, Mitrovice/Prishtina, Kosovo)

Abstract

The main purpose of this study is to investigate inflation rate and its impact on the growth rate or to GDP growth for Eurozone countries, using panel data for the period 1997-2017, on an annual basis with a total of 257 observations. For conducting the study, and achieving results, a multiple linear regression model with the least squares regression is used. Moreover, multiple linear regression analysis has been applied in order to investigate whether Inflation rate,as an independent variable,has any significant impact on economic growth. Consequently,in order to test the data used in the model we have applied diagnostic tests, such as Durbin-Watson test to analyze the correlation of serial correlation, as well as the Breusch-Pagan test for heteroskedasticity. The tests’results give us strong indications that the model has no relation between of serial correlation and there is no heteroskedasticityeither. The study conducted shows results generated from the model, and according to the econometric results indicate that Inflation rate has positive impact on the economic growthrate for euro area.

Suggested Citation

  • Nexhat Kryeziu & Esat Durguti, 2019. "The Impact of Inflation on Economic Growth: The Case of Eurozone," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 8(1), pages 01-09, January.
    • Handle: RePEc:rbs:ijfbss:v:8:y:2019:i:1:p:01-09
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    References listed on IDEAS

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