Cyclically-adjusted budget balance: An alternative approach in estimating the fiscal position for Albania

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.