Abstract:

The recent crisis between Russia and Ukraine resulted in most European countries experiencing high inflation rates from early 2022. Therefore, analysis the relationship between the inflation rate and economic growth in developing European countries is the primary objective of this research. In addition, this study will analyze the relationship between inflation and growth in a sample of 20 European developing countries from 1995 to 2022. We applied several methods to substantiate the hypotheses and test the data, including econometric measurements based on regression techniques such as OLS, Fixed Effects, Random Effects and GMM's Dynamic Panel Data Estimator. The relationship between inflation and economic growth based on the results of the study show a non-linear relationship, where a 1% increase in inflation levels expected to negatively impact economic growth in developing European countries by -0.017%. In addition, the results of this study also show a negative correlation between the inflation rate and private consumer spending. The limitations of this study are that the data only covers the period up to 2022. Therefore, in the future, this study should support more measurements considering the following years, when the inflation rate in European developing countries remains high.

Keywords:

Inflation, Private Consumption, Economic Growth, Government Spending, European Developing Countries.

JEL code:

JEL code: H63, E21, 040, H50, B40.

How to Cite:

Getoar Lubeniqi, Artan Haziri and Kestrim Avdimetaj. Impact of Inflation on Economic Growth in Developing European Countries. [ref]: vol.21.2023. available at: https://refpress.org/ref-vol21-a152/