Inflation and Transmission Mechanism in Albania. New Empirical Evidence
Author | Ilira Pulaj |
Position | Department of Economics, 'Ismail Qemali' University, Vlorë, Albania. |
Pages | 231-239 |
231
Vol. 4 No.1
May, 2018
Balkan Journal of Interdisciplinary Research
IIPCCL Publishing, Graz-Austria
ISSN 2410-759X
Acces online at www.iipccl.org
InationandTransmissionMechanisminAlbaniaNewEmpiricalEvidence
Ilira Pulaj
Department of Economics, “Ismail Qemali” University
Vlorë, Albania
Abstract
Targetinginationisoneoftheregimesappliedinmanydevelopedordevelopingcountries
ItisalsoappliedtotheAlbanianeconomyunderaexibleexchangerateTheaverageannual
inationofthefourthquarterresultedmovingtoexpecteddirectionDespitekeeping
inationundercontrolpressuresandexternalthreatsareongoingTherecentnancialcrisis
hasalsohaditseectsontheeciencyof monetarypolicyon pricesThe aimofthis paper
is to make a qualitative and quantitative assessment of exchange rate as channel of monetary
transmission by providing evidence from Albanian experience by using Autoregressive VAR
model. As an open economy the exchange rate has been one of the most important contributing
atpricelevelbyexchangeratepassthrough
KeywordsInationmonetarytransmissionmechanismexchangerate
Indtroduction
Therecentdecadestheinationtargetingstrategyhasbeenwidelyused by both
developedanddevelopingcountrieswithnonconsolidatedcapitalmarketsForall
authorsitisanowledgedthatinationisamonetaryphenomenonthereforeinthe
long run, monetary policy can contribute to the economic development of the country
whilemaintainingalowandstableinationrateForthisreasonthemainobjective
of monetary policy is price stabilityThe development of ination in Albania has
been under the pressure of local and international macroeconomic developments in
whiitisnotedthattheannualinationratehasreaedstabilizedvaluesduetothe
generationoftoleranceoftheBank ofAlbaniaBokaTorluccioTheInation
TargetingRegimeisaforecastingprocedurethat analyzesthedependencebetween
theeconomic indicators step by step to thelevelof macrolinks and is a publicly
understandable meanism that leads to increased central bank responsibility
TheBank ofAlbania aimsat apositiveination ratetotake intoaccount the rapid
tenologicalevolutionofproductsandtheirqualityimprovement
TheexangeratemeanismwillbeexaminedinthethirdpartWiththeincreasing
internationalizationofeconomiesall overthe worldand exibleexange ratethe
importanceoftheexangeratehasincreasedThismeanismisthoughttobemore
importantin openeconomiesand increaseswiththe degreeofopenness Mishkin
meansthatinarelativelyclosedeconomyitseectshouldnotbeveryimportant
Hisdynamicshasangedandthenancialcrisishashadanimpact
Inationtargeting
Inationtargetingcanbedenedasaregime thatcontains aclear targetfor future
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