Inflation and stabilisation in Albania

This article analyses the determinants of inflation in Albania during the transition period. We attempt to explain why Albania was successful in reducing inflation, by the end of 1995, to a level comparable to many countries in the European Union. We discuss the relative importance of monetary, fiscal and external variables, and we highlight the role of remittances by emigrants. Using vector autoregression analysis, we demonstrate how shocks to money growth and remittances affect the subsequent paths of inflation and the exchange rate. Our main conclusion is that, while there are important lessons from the Albanian experience for other ex-communist countries, the presence of large-scale emigration and huge I-emittance flows makes Albania unique among European countries in transition, in the extent to which these factors aided the anti-inflation programme. However, recent events have demonstrated that political stability and control of the informal financial sector ai-e also crucial for low inflation

A Critical Assessment of Fiscal Policy and Impact on Economic Growth. Albanian and Transition Economies Case

The main focus of this paper is making a critical assessment of possible links that exists between public finance policies and growth during transition period in Albania. Based on panel data technique is tested the impact of government size and the effect of budget deficit in economic growth. On revenue side of public finance are done important reform, such as the introduction of VAT and flat taxes for both personal income tax and corporate income tax. A common trend in the last years has been substantial deduction of corporate income tax. Based on taxation theory are also analyzed, the main determinants of tax performance in selected transition economies. The main findings of this work are that both government size and fiscal deficit are important factors that influence growth performance. The study has found support for negative impact on growth of government size in transition economies. In tax performance evaluation for transition economies, GDP per capita, share of agriculture and share of industry have the expected impact in accordance with tax literature and previous studies. Total government expenditure has a positive impact in tax collection. Shadow economy is important for tax performance; therefore in order for the government to increase tax revenue, the tax evasion should be reduced.fiscal, finance, tax, taxation, budget