The determinants of inflation in Venezuela / Muhammad Aqmal Hakim Hidzir

Inflation is one of the famous macroeconomic problems that always got intention globally. Generally, inflation refers to the continue increasing in general price of goods and services in a certain period of time that can cause the declining in purchasing power of consumer. In fact, the world has recorded that the Republic of Venezuela has the highest inflation rate ever. Moreover, the economists state that the Venezuela's inflation not only reached normal inflation rate, but had turned into a hyperinflation level. Since the arising of this issue, the study intends to make a further investigate on determinants that affecting the inflation in Venezuela country. This research analyze the inflation rate as the dependent variable, meanwhile the independent variables are the crude oil price, unemployment rate, money supply, exchange rate, gross domestic product (GDP), and government expenditure. Quantitative method and the econometric model are chosen to examine the relationship between the dependent and independent variables. With the 37 years observation of sample size from year 1978 to year 2014, the data had run by using the Ordinary Least Square (OLS) method. All of this time series data are collected from the World Bank Data website. It founds that there are two relationships exist which are the positive and negative relationship of independent variables towards the inflation rate. Based on result, money supply and government expenditure show the positive relationship meanwhile for crude oil price, unemployment rate, exchange rate and gross domestic product show then opposite relationship towards the inflation rate.