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Drivers And Impacts Of Inflation: A Look At Energy Prices, Exchange Rate Volatility, And Stock Markets

Author

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  • Alexandru VLADOI
  • Lara-Greta MERLING
  • Kevin CASHMAN

Abstract

In the last decade the world has experienced a number of global crises which triggered economic downturns. Impacts from the global financial crisis, the global COVID pandemic, and Russia's invasion of Ukraine trigger instability in financial markets. This paper explores similarities and differences between these crises based on inflation and its energy-related components. A Vector Autoregressive (VAR) model is used to analyze both EU-level trends, as well as data for Romania. The findings indicate idiosyncratic shifts in the relationships between variables. The changes are often specific to individual shocks and the policy context. How policy makers respond to these shocks will also impact the fiscal space, the borrowing costs of countries, and the cost of servicing debt, which risks a return to the type of austerity policies that slowed down the post-financial crisis recovery. There is a need for more detailed research and investigations in policy responses designed to respond to ongoing events.

Suggested Citation

  • Alexandru VLADOI & Lara-Greta MERLING & Kevin CASHMAN, 2023. "Drivers And Impacts Of Inflation: A Look At Energy Prices, Exchange Rate Volatility, And Stock Markets," Eastern European Journal for Regional Studies (EEJRS), Center for Studies in European Integration (CSEI), Academy of Economic Studies of Moldova (ASEM), vol. 9(2), pages 41-52, December.
    • Handle: RePEc:aem:journl:v:9:y:2023:i:2:p:41-52
    DOI: https://doi.org/10.53486/2537-6179.9-2.03
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    References listed on IDEAS

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    1. Elina BENEA-POPUȘOI & Polina ARIVONICI, 2021. "Remittance trap: comparative approach of the Republic of Moldova and other ex-socialist countries," Eastern European Journal for Regional Studies (EEJRS), Center for Studies in European Integration (CSEI), Academy of Economic Studies of Moldova (ASEM), vol. 7(2), pages 59-76, December.
    2. Mircea DIAVOR, 2021. "Analysis of the Propagation Effects of Remittances on the Vulnerability of External Trade of the Republic of Moldova," Eastern European Journal for Regional Studies (EEJRS), Center for Studies in European Integration (CSEI), Academy of Economic Studies of Moldova (ASEM), vol. 7(2), pages 94-120, December.
    3. Mr. Niels-Jakob H Hansen & Mr. Frederik G Toscani & Jing Zhou, 2023. "Euro Area Inflation after the Pandemic and Energy Shock: Import Prices, Profits and Wages," IMF Working Papers 2023/131, International Monetary Fund.
    4. Elina BENEA-POPUȘOI & Polina ARIVONICI, 2021. "Remittances’ side effects on economy: comparative approach of the Republic of Moldova and other ex-socialist countries," CSIE Working Papers, Center for Studies in European Integration (CSEI), Academy of Economic Studies of Moldova (ASEM), issue 17, pages 26-33, June.
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    More about this item

    Keywords

    economic crises; energy prices; exchange rate volatility and stock markets.;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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