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A Method for Indicating Economic Transition with an Application to Albania

Author

Listed:
  • C. Paul Hallwood

    (University of Connecticut)

  • Ronald MacDonald

    (University of Strathclyde)

Abstract

We offer a method for assessing the progress of transition economies towards becoming market economies. A simple macroeconomic model is used which incorporates certain microeconomic features relevant to a transition economy that is introducing market-driven resource allocation. According to our model, mean reversion in the real exchange rate suggests that early economic reforms from 1992 to 1996 in Albania were promoting economic transition. Our findings for this period are supportive of the analysis of others including the IMF.

Suggested Citation

  • C. Paul Hallwood & Ronald MacDonald, 2002. "A Method for Indicating Economic Transition with an Application to Albania," Eastern Economic Journal, Eastern Economic Association, vol. 28(4), pages 465-480, Fall.
    • Handle: RePEc:eej:eeconj:v:28:y:2002:i:4:p:465-480
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume28/V28N4P465_480.pdf
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    References listed on IDEAS

    as
    1. Ronald Macdonald, 1995. "Long-Run Exchange Rate Modeling: A Survey of the Recent Evidence," IMF Staff Papers, Palgrave Macmillan, vol. 42(3), pages 437-489, September.
    2. John Y. Campbell & Pierre Perron, 1991. "Pitfalls and Opportunities: What Macroeconomists Should Know about Unit Roots," NBER Chapters, in: NBER Macroeconomics Annual 1991, Volume 6, pages 141-220, National Bureau of Economic Research, Inc.
    3. Andrew W. Lo, A. Craig MacKinlay, 1988. "Stock Market Prices do not Follow Random Walks: Evidence from a Simple Specification Test," The Review of Financial Studies, Society for Financial Studies, vol. 1(1), pages 41-66.
    4. Cochrane, John H, 1988. "How Big Is the Random Walk in GNP?," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 893-920, October.
    5. Kornélia Krajnyák & Jeromin Zettelmeyer, 1998. "Competitiveness in Transition Economies: What Scope for Real Appreciation?," IMF Staff Papers, Palgrave Macmillan, vol. 45(2), pages 309-362, June.
    6. John Williamson, 1994. "Estimating Equilibrium Exchange Rates," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 17, October.
    7. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501, Decembrie.
    8. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
    9. Paul Hallwood & Ronald MacDonald, 2008. "International Money and Finance," Working papers 2008-02, University of Connecticut, Department of Economics.
    10. László Halpern & Charles Wyplosz, 1997. "Equilibrium Exchange Rates in Transition Economies," IMF Staff Papers, Palgrave Macmillan, vol. 44(4), pages 430-461, December.
    11. Stein, Jerome L. & Allen, Polly Reynolds, 1998. "Fundamental Determinants of Exchange Rates," OUP Catalogue, Oxford University Press, number 9780198293064, Decembrie.
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    Cited by:

    1. Arjeta Vokshi (Abazi), 2013. "A Monetary Conditions Index For Albania," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(15), pages 1-18.

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    More about this item

    Keywords

    Exchange Rates; Transitional Economies;

    JEL classification:

    • P27 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Performance and Prospects
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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