This study analyzes the relationship between macroeconomic variables that influence inflation. Through our research, we will analyze the influence of GDP growth, remittances, level of exports, level of imports, and foreign direct investments on the inflation rate for the Western Balkan. The research has applied panel data using dynamic approaches such as fixed effects, and Arellano-Bover/Blundell-Bond estimation to determine relationships between variables and their impact on inflation. The research used annual series data from 2003 to 2019 provided by the World Bank and the International Monetary Fund. Likewise, to test a stationary of data was applied three estimations for the unit root test and Johansen cointegration. The research results reveal that in the short run, all variables influence the inflation rate, except for foreign direct investment, which has insignificant influence. Moreover, the analyses through the Arellano-Bover/Blundell-Bond estimation reveal that GDP growth, imports, and foreign direct investments have a positive influence on the inflation rate, while, working remittances and exports have ABOUT THE AUTHORS Esat Durguti. Associate Professor at the University of Mitrovica, has completed his Ph.D. at the University of Tirana, Faculty of Economics -Department of Finance. The preferred field of research in financial economics, banking, etc. Mr. Durguti has rich experience in the field of public finance and the financial industry, in addition to experience in teaching.Qazim Tmava.