## Reducing Inflation: Lessons From Albania's Early Success

_IMF Working Papers, May 1, 1998_

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## Bibliographic details
- Authors: C. McNeilly, Doris Schiesser-Gachnang
- Published: May 1, 1998
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451956313.001

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### Overview
- Inflation in Albania fell rapidly once comprehensive stabilization policies and market-oriented reforms were launched, in contrast to other transition economies where price liberalization was generally followed by persistently high inflation.
- The early reduction of underlying inflation is confirmed by trimmed mean estimates of core inflation, which use a central portion of the commodity-wise inflation distribution.
- Estimating core inflation is demonstrated to be useful for transition economies.
- The early success in curbing inflation is attributed to the extremely broad scope of initial price liberalization coupled with key supporting measures.
- The experience gives hope for early recovery from Albania’s 1997 economic crisis.

### Key Findings
- Rapid fall in inflation in Albania following comprehensive stabilization policies and market-oriented reforms.
- Contrast with other transition economies: price liberalization elsewhere was generally followed by persistently high inflation.
- Trimmed mean estimates of core inflation confirm early reduction of underlying inflation.
- Usefulness of core inflation estimation methods for transition economies emphasized.
- Early success attributed to extremely broad scope of initial price liberalization plus key supporting measures.
- Implication: potential for early recovery from the 1997 economic crisis in Albania.

### Methodology and Measures
- Core inflation measured using trimmed mean estimates that use a central portion of the commodity-wise inflation distribution.
- Focus on underlying inflation dynamics rather than headline measures alone.

### Policy Implications and Recommendations
- Implement comprehensive stabilization policies alongside market-oriented reforms to reduce inflation rapidly.
- Employ broad price liberalization combined with supporting measures to enhance effectiveness.
- Use trimmed mean/core inflation estimation techniques in transition economies to monitor underlying inflation and inform policy.

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## Content in this bundle

- **Reducing Inflation: Lessons from Albania's Early Success - WP/98/78**
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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/reducing-inflation-lessons-from-albania-s-early-success-2632_