Inflation and Money Demand in Albania
July 1, 1998
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Summary
The paper uses a simple analytical framework to estimate relationships between prices, money the exchange rate, and interest rates in Albania during 1993–97. The estimated parsimonious error correction model extends the findings of a growing literature on inflation and money demand in transition economies. The results suggest that, after the one-time effects of the 1997 crisis are taken into account, the long-run determinants of inflation and money demand remained unchanged. Strong financial policies since mid—1997 appear to have helped to restore conditions for low inflation and stable money demand.
Subject: Demand for money, Depreciation, Exchange rates, Foreign exchange, Inflation, Money, National accounts, Prices, Real exchange rates
Keywords: Albania, Chow statistics, Demand for money, Depreciation, exchange rate, exchange rate expectation, Exchange rates, inflation, interest rate, money demand, money demand demand shock, money demand development, money demand processes, price level, price level equation, Real exchange rates, shocks in Albania, U.S. dollar, vector autoregression, vector portmanteau statistic, WP
Pages:
34
Volume:
1998
DOI:
Issue:
101
Series:
Working Paper No. 1998/101
Stock No:
WPIEA1011998
ISBN:
9781451948585
ISSN:
1018-5941
