Euro Area 12: Inflation and Regulatory Quality

I was just fumbling with the Worldwide Governance Indicators and I stumbled upon this, so I thought that I should share this chart with you. I tried to include as many years as possible to minimize as much as possible the probability that only one of the multitude of factors that can induce inflation is at work there. For example, during the 2002 – 2007 period, demand-pull inflation must have been present at peripheral countries. Enough with my blabbing here’s the chart.

source: Eurostat, World Bank, own calculations

Of course correlation is not causation, but with such a multi-factoral affair such as inflation this is not a bad fit so I couldn’t resist sharing it.

P.S. In case you're wondering what this indicator includes here it is.