Determinants of Inflation in EU Member States: A Dynamic Analysis of Cost-Push and Demand-Pull Factors
Determinants of Inflation in EU Member States: A Dynamic Analysis of Cost-Push and Demand-Pull Factors
Author(s): Jordan Kjosevski, Mihail Petkovski, Aleksandar StojkovSubject(s): National Economy, Supranational / Global Economy, Business Economy / Management, Micro-Economics, Political economy, Socio-Economic Research
Published by: SAV - Slovenská akadémia vied - Ekonomický ústav SAV a Prognostický ústav SAV
Keywords: inflation; ARDL; cost-push factors; European Union; PMG estimator;
Summary/Abstract: This study examines the determinants of inflation in EU member states from 2014 to 2024 using quarterly data for old EU, new EU, and full EU27 country groups. A dynamic panel ARDL model estimated with the Pooled Mean Group estimator is applied to capture short-run dynamics and long-run relationships. The results show strong inflation persistence across all groups, with lagged inflation as a key short-run driver. Inflation is mainly explained by external and supply-side factors rather than domestic demand. Energy prices, exchange rates, food prices, and supply chain pressures have significant effects, while unemployment and industrial production remain largely insignificant, indicating a weakened Phillips curve relationship. Interest rates show a negative long-run effect in the full EU sample. New EU member states are more sensitive to external shocks, while old EU members display more stable inflation dynamics.
Journal: Ekonomický časopis
- Issue Year: 74/2026
- Issue No: 03-04
- Page Range: 133-158
- Page Count: 26
- Language: English
