Research Papers

The paper analyses the performance of the inflation forecasting and its role in the monetary policy decision-making at the Bank of Albania over 2011-2012. The study identifies the main challenges facing the projection process, focusing on published inflation versus the forecasts and expectations values and the monetary policy formulation as well. The accuracy of inflation forecasting models in use is studied through a set of statistical indicators and econometric tests. The results for the entire period 2006-2012 are compared to those of the period 2006-2010. The paper concludes that the combination of all forecasts as simple average has consolidated its position as the most accurate forecast at a 6-quarter horizon, whereas in the 4-quarter one the mean of deviations reaches almost the zero value.

The study is based on the literature started by Frankel and Romer (1999) on using instruments for predicted trade to analyze its effect on growth. It uses panel data to better control for possible time-invariant characteristics. The fall of communism is used as an exogenous shock to the system. The study finds that not all attempts at creating good instruments are successful. However the instruments that perform well lead to results comparable with the existing literature. Trade is found to have a positive and significant effect on a country’s income.

This paper tries to investigate the behavior of fiscal policy and the yield curve in Albania, over the period 1999Q1:2012Q2, by employing impulse response functions obtained by Vector Autoregressive (VAR) model and variance decompositions.

In this paper, we thoroughly analyse the corporate governance practices and its legal framework in the Albanian banking sector. Issues of “gaps” between banking regulation and corporate governance have recently remerged, once the global financial crisis exposed the flaws of past decade’s deregulation process in developed countries. In transition economies, these gaps are outcomes of transition challenges mostly related to the rule of law consolidation, ownership structure and professional and institutional capacities.

This paper aims at serving as a starting point for an alternative approach to analyse and monitor the fiscal position in Albania. The approach used up to date to assess the fiscal position in Albania refers to budget indicators expressed in nominal terms. Nominal budgetary figures also hold effects caused by temporary factors in the economy that go beyond the scope of fiscal policy. In order to evaluate the fiscal position of Albania, we propose an alternative approach that helps estimate the cyclically-adjusted budget balance with a view to capture only the effects of discretionary fiscal policy on the budget balance, by dampening or eliminating the effect of cyclical factors on budget indicators.

A survey with 200 individuals was conducted, during February - March 2012, in the framework of estimating the usage of payment instruments and the responses are analysed. The survey took place in Tirana–Durrës area with the highest concentration of population and banking transactions as well. The study is based on a public survey. It reflects the evaluations of respondents about the questions they were exposed. The main findings of the survey consist on: a considerable development of banking instruments usage compared to some years earlier; support to the Bank of Albania’s projects related to financial literacy; the deepening of financial literacy and turning it into a general culture; monitoring of public financial literacy; a deeper perception of issues on transparency about the usage of payment instruments.

The latest financial crisis reflected the need to properly understand, measure and possibly project the systemic events, which have a high probability of interrupting of the normal functioning of the financial markets, resulting in a suffering of the economic growth. The aim of this paper is to present a Financial System Stress Index for Albania, which aims to capture the level of financial stress of the economy in a single and comprehensive index (FSSIA). We assess the interlinkages of the different market segments through evaluating their impact on economic growth, hence providing a clear method in discussing the evolution of the subindices of the banking sector, money market, foreign exchange rate and housing market into the financial stress.

This discussion material analysis the effects of fiscal policy on the economic growth in the case of a small open developing country, Albania, by employing an endogenous growth model on a GMM approach. The results obtained show that government revenue policies has a higher effect on economic growth than those on government expenditure. The impact of revenue and expenditure on growth were analysed by categorising tax revenue into distortionary and non-distortionary, whilst government expenditure were divided into productive and non-productive.