Research Papers

This discussion paper focuses on the long-run mean-reverting properties of debt to GdP ratio and the role of the government in shaping the fiscal policy across the different regions for the period 2000-2011. the material, evaluates the solvency condition by mean of panel unit root and also estimate the fiscal responses of fiscal policy in 27 european union and euro area and other future and potential member countries in a panel Var.

The main goal of this paper is to develop a better understanding of international capital flows based on the episode of sudden stop concept. first, we compute a sudden stop indicator (or our binary variable) in order to analyze movements in foreign capital flows. second, the probability of these episodes is estimated as a function of some economic fundamentals by running a probit estimation with quarterly data over the period 2004–2012.

As a small open economy, Albania is thought to be prone to foreign inflationist influences. The increasing degrees of trade openness and exchanges would support such claim with imported inflation producing an impact on overall inflation. This paper attempts to quantify imported inflation for a selected sample of consumer goods representing 60% of the CPI basket.

This paper examines the optimal level of foreign reserve holdings for Albanian based on optimal model approach proposed by Gonçalves (2007). The model is grounded on a set of economic fundamentals and crisis inspired indicators, such as debt level, capital account and sudden stops patterns, risks to large deposit withdrawals during crises, which has achieved less attention previously. Our results show that actual level of international reserve in Albania is closed to optimal level especially during the last two years, but below the optimal level if the government chooses to fully guarantee the foreign currency deposit withdrawal. Consequently, in the medium term, Bank of Albania should try to increase its foreign reserves in line with the optimal approach.

The latest financial crisis emphasized the importance of the housing market in the economy. The comprehensive assessment of house price determinants has gained more importance among academic studies. This study aims to assess the role of some financial factors in the performance of house prices for Albania through the VECM cointegration analysis. The empirical findings show that house prices are influenced positively by bank lending, and negatively by the Treasury bills yield, in the long term. The inclusion of the exchange rate in the empirical analysis in determining the house prices is a novelty of this study.

After the global financial crisis, in Central Eastern and Southeastern European countries, credit has slowed down quickly, in some cases even contracting considerably, leading to a decline on financial intermediation and a weak economic performance. This paper aims to evaluate empirically the factors that have influenced the lending activity of banks in these countries before and after the global crisis. The estimated results obtained by applying a panel regression method with fixed effects, show that the main factors behind credit developments are the economic slowdown, the deterioration of the loan quality, and the drop in foreign financing from abroad, with the latter being to some context offset by the increased domestic funding. This analysis adds value to the existent research for this region and helps policy makers in understanding the similarities and differences between peer countries, so as to properly address the main vulnerabilities.

This paper continues the development of the multi-dimensional density as alternative method of empiric investigation in the study of economics as a social phenomenon, defined and considered as a random event. The paper further develops the research of Tanku and Ceca (2013) by providing the tools and the metric of estimation method. The paper is based on the definition of the economy as a multi-dimensional random process and the estimation of the multi-dimensional joint probability function. The empirical relevance of the methodology is demonstrated by the reexamination of the relationship between money and inflation in the case of developed economy.