Andreea-Madalina Bozagiu
Iuliana Violeta Enache
Abstract:
This study investigates the macroeconomic determinants of high inflation using unadjusted and adjusted logit and probit models, with validation tests confirming the robustness of the results. The findings highlight the output gap as a key predictor, with an odds ratio of 1.55 in the adjusted probit model, suggesting that a widening gap between actual and potential production significantly increases the likelihood of high inflation. The EUR/RON exchange rate emerges as another critical factor, with an inverse relationship to inflation (odds ratio ~0.88), emphasizing the importance of currency stability in mitigating inflationary pressures. Although less influential, the trade balance and unemployment rate also exhibit statistically significant effects, reflecting the role of external demand and labor market dynamics in shaping inflation trends. Model diagnostics, including the Hosmer-Lemeshow test and AUC, confirm a good fit and predictive accuracy. These findings provide actionable insights for policymakers to design coordinated fiscal and monetary strategies aimed at stabilizing inflation during economic instability.
Tenth International Scientific-Business Conference LIMEN Leadership, Innovation, Management and Economics: Integrated Politics of Research - LIMEN 2024 - International Scientific-Business Conference β LIMEN 2024: Vol 10. Conference Proceedings , December 5, 2024
Conference Proceedings published by: Association of Economists and Managers of the Balkans, Belgrade, Serbia
ISBN: 9788680194929 , ISSN: 26836149 , DOI: 10.31410/LIMEN.2024
Creative Commons Non Commercial CC BY-NC: This article is distributed under the terms of the Creative Commons Attribution-Non-Commercial 4.0 License (https://creativecommons.org/licenses/by-nc/4.0/) which permits non-commercial use, reproduction and distribution of the work without further permission.
