Energy Products and the Incidence of Inflation: Empirical Evidence from the Countries of the Western Balkans

Abstract

This study examines the impact of monetary policies on the inflation rate in the Western Balkans. Utilizing long-term panel data and a fixed effects estimator, the research explores the dynamic relationships among three key variables: interest rates, energy product prices, and inflation. The findings reveal a negative association between interest rates and inflation. Additionally, the study highlights the significant impact of energy on inflation compared to other commodity prices. These insights offer valuable guidance for policymakers, aiding in the development of targeted and effective economic strategies to address the specific challenges faced in WB6 countries. The implications derived from this research can inform strategic decision-making and policy frameworks aimed at mitigating inflationary pressures in the Western Balkans.   Received: 20 March 2024 / Accepted: 16 June 2024 / Published: 5 July 2024