Inflation and Money Demand in Albania

Sanja Kalra

No 1998/101, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; exchange rate; price level; interest rate; Albania; inflation; money demand; vector autoregression; money demand development; exchange rate expectation; Chow statistics; money demand demand shock; shocks in Albania; money demand processes; U.S. dollar; vector portmanteau statistic; price level equation; Demand for money; Exchange rates; Real exchange rates; Depreciation (search for similar items in EconPapers)
Pages: 34
Date: 1998-07-01
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1998/101

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