Albania's Current Account Deficit and Policy Implications

This paper tries to assess the current account norm in Albania. For this reason, the study is based on the accounting framework developed by Lane and Milesi-Ferretti (2006) as well as the empirical framework that is based on panel data estimations. The “equilibrium” levels suggested by these methods are often dissimilar, thus the size of current account adjustment needs to be carefully interpreted. The paper aims to shed light also on possible implications that recent external deficit deterioration might have for monetary policy in concert with fiscal policy.