TFP AND ENDOGENOUS GROWTH IN SOUTH EAST EUROPEAN COUNTRIES WITH SPECIAL FOCUS ON ALBANIA

The main objective of this paper is to determine the forces that have driven the economic growth in Albania relative to Southeast and Central European countries from the beginning of transition period year 1993 until 2008, before the global crises was spread in developing countries. We are based in Growth –Accounting approach in order to specify the role of total factor productivity (TPF) as growth enhancing factor in different phases of their economic development and an econometric analyze of major growth factors based on endogenous growth theory. The main findings of this paper are: (1) TFP and capital accumulation has been playing an important role for all countries under survey, the impact of labor as growth enhancing factor has been limited (2) macroeconomic stability,trade openness, and investment in infrastructure matters to growth. Therefore we support the idea that Albania government should give priority of scare government resources towards these sectors.Productivity, economic growth, panel data analyze

An empirical assessment of alternative exchange rate regimes in medium term in Albania

This paper examines the alternative exchange rate regimes and their feasibility to be applied in Albania in medium term. In all empirical work done until now is been found a very low relationship between money and inflation in Albania before and after using the indirect instruments of monetary control. As a result, the motivation for finding other strategies for monetary policy and exchange rate policy is strong and has opened the debate of practitioners in this field. We argue that moving from freely floating exchange rate regime and informal IT strategy in formal IT strategy would be a more preferable strategy that will deal better with the fragile sustainability of current account deficit in Albania but not without problems to be applied. --

Price development in Albania

Even though inflation has been low in the last years in Albania and inside the target rate of about 3 percent determined by Bank of Albania, considering the relevance of this variable for economic activity there is room for careful analysis in order to make evident the potential threatens of domestic price stability. The main objective of this paper is twofold, first analyzing sub-indexes of CPI basket in order to determine the major volatile components, and second aim is to qualify the relative importance of different transmission mechanisms of monetary policy, by using VAR approach. The main finding of this work is that rent fuel and power that constitute the second large sub-indexes of CPI with the weight 24 percent have been the most volatile categories for time period 2000-2008, followed by food sub-index that has the highest weight in Albania CPI basket of about 43 percent. Econometric model has found evidence that money supply is important determinant factor for domestic inflation. There is an immediate response of inflation to shocks in the exchange rate. Even though the exchange rate continues to be an important variable for explaining inflation in Albania, with the development of financial market its importance will decrease. Total loans to GDP ratio in Albania have increased substantially in the last year, and we believe that the importance of lending channel will further increase in Albania with the development of financial market