A Proposal for Creating Real Effective Exchange Rate Monthly Frequency Series for Albania

Dimitrios Dapontas

International Journal of Financial Markets, 2015, vol. 1, issue 3, 83-92

Abstract: The present work is trying to cover the need for a Real Exchange Effective Rate in Albania. The bank of the country didn’t tend to keep this series which is important for competitiveness measure, encloses political risk and was crucial for the development of explanation model of recent empirical works on currency crises and it seem to work well. The results shown that monthly REER was statistically significant and it had negative effect to the possibility of currency crisis occurring. I use the PPP Real Exchange Rate for the set of the countrys’ trade partners weighted in their share to the Albanian trade balance, combined with price level (CPI) spread and nominal exchange rates for a fourteen year period in monthly frequency (January 1995- December 2008). I select a theoretical framework suitable for the examined country and I propose the methodology for further use.

Keywords: developing economies; Effective Real exchange rate; Trade Balance. (search for similar items in EconPapers)
Date: 2015
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