Open AccessThe Impact of Inflation on Economic Growth
Author(s) -
Nexhat Kryeziu,
Esat Durguti
Publication year - 2019
Publication title -
international journal of finance and banking studies
Language(s) - English
Resource type - Journals
ISSN - 2147-4486
DOI - 10.20525/ijfbs.v8i1.297
Subject(s) - heteroscedasticity , econometrics , inflation (cosmology) , economics , linear regression , statistics , regression analysis , inflation rate , ordinary least squares , regression , panel data , autocorrelation , simple linear regression , order (exchange) , mathematics , interest rate , macroeconomics , physics , finance , theoretical physics
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 heteroskedasticity either. 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 growth rate for euro area.