A regression model of inflation in Montenegro

Vesna Karadzic

Montenegrin Journal of Economics, 2014, vol. 10, issue 2, 103-110

Abstract: A regression model of inflation in Montenegro is specified and estimated employing the technique of OLS on a monthly time series data for the three year period 2010-2013. The stationary and co-integratin tests were adopted to examine the data in order to establish whether there exist a long-run relation among the variables. Several diagnostic tests were used to check for the specification of the model and problems of heteroscedasticity, autocorrelation and multicolinearity in the estimated regression model. The regression model is used to test theory on empirical data in case of Montenegro. As expected, the estimated model is another empirical evidence of the Philips curve i.e. theoretical trade-off between unemployment and inflation in a short run. Moreover, the results of the regression analysis proved theory that there is a direct relation between inflation and import-to-export ratio, while the relation inflation - GDP rate is an indirect one.

Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:mje:mjejnl:v:10:y:2014:i:2:p:103-110

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