Research Papers

The main economic indicators in Albania exhibit irregular patterns since the 1990s that may affect economic analyses with linear methods. The purpose of this study is to assess the ability of nonlinear methods in producing forecasts that could improve upon univariate linear models. The latter are represented in our analysis by the classic autoregressive

In the context of the Bank of Albania’s primary objective of achieving and maintaining price stability, generating accurate and reliable forecasts for the future rate of inflation is a necessity for its successful realization.

We estimate the natural rate of interest in Albania using the Bayesian Maximum Likelihood method and the Kalman Filter. The structure of the model used to identify the behaviour of the natural interest rate in time is based on the seminal work of Laubach and Williams (2003) and includes a joint estimation of the output gap and of potential growth.

Economies with open financial and capital account, high euroization and high foreign bank ownership are favorably exposed to global liquidity and foreign macro-financial shocks. In this study I assess how these forces have played out for Albania during the recent two decades.

This paper describes the links between financial sector and macroeconomic conditions into MEAM macro model. The focus is on banking lending rate, in terms of macroeconomic indicators impact, such as the probability of default of private sector and economic developments. Through this material we try to enrich MEAM macro model with financial indicators.