Why Did Norway Encounter Pronounced Levels of Inflation After the Pandemic? A Study of Inflation Dynamics
Master thesis
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https://hdl.handle.net/11250/3129681Utgivelsesdato
2023Metadata
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- Master Thesis [4298]
Sammendrag
This master thesis conducts a comprehensive analysis of inflation dynamics, trying to gain a
better understanding of why inflation increased to such pronounced levels in the years after
the COVID-19 pandemic. The pandemic caused the world economy several serious problems,
with high inflation being the major problem in the aftermath of the pandemic. We analyzed
this problem by employing a time series analysis to identify and evaluate key determinants, as
well as a case study, comparing inflationary trends in Norway and Switzerland.
Through detrending CPI and nine different economic variables, we carried out a multiple
regression analysis to investigate whether the economic variables could explain the rise in
inflation. In our empirical investigation, we ascertain that money supply, credit volume, the
Harmonized Index of Consumer Prices (HICP), and unemployment emerge as the most
significant factors influencing inflation. Our findings support existing literature on inflationary
processes, which provides policymakers and economists with nuanced perspectives for
informed decision-making.
In addition to the time series analysis, a comparative case study between Norway and
Switzerland is undertaken to further assess how a country´s macroeconomic landscape
influences inflation. The study reveals a notable disparity in inflation rates, with Switzerland
exhibiting lower inflation levels attributed to the resilience of its currency. This underscores
the vital role of exchange rate dynamics in shaping inflation outcomes and advocates for a
holistic approach to economic policy formulation.
In conclusion, this master thesis contributes to the ongoing discussion on inflation, presenting
a nuanced analysis that deepens our comprehension of the multifaceted forces driving
inflationary trends. Through a combination of empirical evidence and case study insights, our
research strives to inform strategic policy decisions aimed at fostering economic stability and
resilience in an era of continual change.