Econometric Model For The Analysis Of The Correlation Between The Inflation Rate And The Gross Domestic Product

The economic growth is based on increasing the results of economic activity at a macroeconomic level. This is measured by the growth rate of macroeconomic indicators such as gross domestic product, gross national product and national income. The gross domestic product is the most commonly used indicator for measuring the output of an economy. It clearly reflects the size of an economy, while gross domestic product per capita illustrates changes in living standards over time. The gross domestic product growth rate is probably the most important indicator of economic growth. Given its complexity, this indicator depends on a number of factors. These factors include capital, human resources, productivity and inflation rate. Taking into account that the evolution of gross domestic product reflects an economic growth, it is interesting to see which are the main methods that are able to increase it. Thus, we can talk about stimulating/increasing consumption – the collected tax rate increases, thus increasing the income to the state budget. Another method is to increase the level of investment that can be achieved by accessing European funds, which is currently quite low in Romania, and by attracting foreign capital. In order to ensure a positive evolution of gross domestic product, it is important to keep inflation as low as possible.