Kjosevski, Jordan (2025) INFLATION MOVEMENTS IN THE EU IN CONDITIONS OF EXTERNAL SHOCKS. ECONOMIC ANNALS, LXX (246). pp. 7-35.
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Abstract
This study examines the key 
factors driving inflation in the European 
Union (EU) member states, focusing on 
both cost-push and demand-pull effects. By 
analysing monthly data from January 2005 
to February 2023, the study investigates 
how inflation dynamics have evolved over 
time, particularly in response to external 
shocks such as rising energy prices. Inflation 
reached its highest levels in recent decades 
in 2022, driven by a combination of cost�push factors, such as rising crude oil prices, 
and the demand-pull effects that emerged 
in late 2021. The study employs fully modi�fied ordinary least squares (FMOLS) and 
dynamic ordinary least squares (DOLS) 
methods to analyse long-run inflation de�terminants. These econometric techniques 
are used to address potential issues of endo�geneity and serial correlation in the data�set, providing robust and reliable estimates 
of inflation trends across the EU. The find�ings reveal that inflation was initially driv�en by cost-push factors, but these pressures 
subsided as energy price growth decelerat�ed. From October 2021 onwards, demand�pull effects became more pronounced as ag�gregate demand surged. Additionally, the 
study highlights significant disparities in 
how EU member states responded to exter�nal energy price shocks, underscoring the 
need for more coordinated EU energy poli�cy. Its results suggest that EU policymakers 
need to implement more coordinated fiscal 
and energy policies to mitigate the impacts 
of external price shocks. Future research 
should focus on country-specific drivers of 
inflation and assess the long-term effects 
of coordinated energy strategies within 
the union. This study contributes to the 
literature by using advanced econometric 
methods to analyse inflation dynamics over 
an extended period and provides valuable 
insights for policymakers, particularly in 
addressing the varying impacts of external 
shocks across EU mem
| Item Type: | Article | 
|---|---|
| Subjects: | Scientific Fields (Frascati) > Social Sciences > Economics and Business | 
| Divisions: | Faculty of Economics | 
| Depositing User: | UKLO Mrezha | 
| Date Deposited: | 08 Oct 2025 10:43 | 
| Last Modified: | 08 Oct 2025 10:43 | 
| URI: | https://eprints.uklo.edu.mk/id/eprint/11123 | 
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