Analysis of Relationships between Fiscal Policy, Inflation and GDP Growth in Eurozone and United Kingdom between 2007-2022

Bachelor thesis focuses on comparative analysis of development of fiscal policy, inflation and GDP growth among others in United Kingdom, France and Germany to figure out whether relationships described by economic theory also exist in practice, all that analyzed within scope of correlative analysis and subsequent comparison. Quantification of correlations is done by means of correlative coefficients. Using these tools bachelor thesis comes to the conclusion of verification of standard theoretical prescription of economic relationships among these macroeconomic variables with minor additions. Thesis for example found out that relationships among these variables correlate more in the long term, that is a time period longer than one year, than within the same year. Practical impact of changes in fiscal policy, based on conducted research, doesn’t seem to be as influential in comparison to general global economic trend, which more or less dictates the tendency of GDP growth and inflation especially. Stand-in variable for analysis of relationships monetary policy has, the short-term interest rate, has proven itself to be as potentially inefficient in reduction of inflation thanks to the corresponding discrepancy in its rate and inflation within given countries. Phillips curve has also been verified, as it shows, even though rather low, negative correlation between unemployment and inflation.