Athanasios Koulakiotis, Ph.D.1, Katerina Lyroudi, Ph.D.2, and Nikolaos Papasyriopoulos, Ph.D.1. (1) International & European Studies, University of Macedonia, 156 Egnatia str., Thessaloniki, 54006, Greece, (2) Business Management, Open Hellenic University, Egnatia 156, Thessaloniki, 54006, Greece
This study investigates, through panel univariate GARCH models for 14 European countries the causality between inflation and GDP and finds that inflation causes GDP at the 5% level of significance and GDP cause inflation at the 10% significance level. Thus, there is a bidirectional effect between the above two cases which is significance at the 10% level.