CAUSAL MACRO-DYNAMICS VARIABLES AFFECTING INFLATION RATESIN OECD AND ECONOMIC BUILD-UP SCALE EFFECTS

Abstract

In this study, we endeavour to establish a comprehensive panel data analysis framework focusing on recent fluctuations and adjustments in inflation rates across OECD countries. Our objective is to delve into the intricacies of these inflationary trends by considering the collective macro dynamics prevalent among the OECD member nations. The understanding of the underlying structure of macro variables, which serves as our foundational framework, and the hierarchical order of the inflation rates' impact assume a pivotal role in elucidating the causal relationships within the purview of the OECD. Furthermore, the implications extend to shaping future economic growth policies within the broader context of global economic integrations. The rationale behind scrutinizing these inflationary escalations on an OECD-wide basis over the past four decades is to illuminate the impact analysis more perspicuously and judiciously. This temporal approach allows us to discern the nuanced impact of inflation values, transcending the developmental variations among countries and accounting for the broader spectrum of inflation rate fluctuations. Additionally, our methodology elucidates the structural scale effects of lagged impact values within the OECD scope. These effects, contingent upon the average macro-dynamic variables employed in our econometric analysis, explain the intricacies of the economic relationships within the OECD. We acknowledge the significance of scale effects, wherein investment rates, exchange rate fluctuations, and current account to GDP rates, intertwined with average economic growth trends in the OECD, wield a direct influence. Our determination to delineate the macro impact values in terms of OECD average inflation values is grounded in the necessity to ascertain the level at which these economic processes interrelate.