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The Impact Of The Interest Rate Policy On The Albanian Economic Growth

Author

Listed:
  • Mimoza Koka

    (Tirana Agricultural University)

  • Anilda Bozdo

    (Tirana European University)

  • Leontiev Çuçi

    (Kristal University, Tirana)

Abstract

In USA, the 2008 global crisis started with the financial crisis, and soon after affected the real economy. It also started as a financial crisis in the Euro zone, while in countries with very weak public debt indicators and current accounts it was transformed into a state crisis. Experts in economics were concerned on how this crisis was being faced by small countries, and which were the most efficient mechanisms and instruments for their economic survival. Analysis of the data shows that financial system and real economy in Albania suffered shock from the crisis, but not collapse. Reasons related to the fact that the banking system and the real economy are less sophisticated than in United States, where the crisis began. Albania has maintained economic growth during the crisis period, although growth rates have fallen. Analysis of the data of the Bank of Albania through regression shows that that the degree of impact of basic interest rate decreases on economic growth is big. This is achieved by keeping inflation in control. The purpose of this paper is to present extent of the impact of the global crisis in the Albanian economy and the measures undertaken by the Bank of Albania for the preservation of economic growth in the framework of both global and Eurozone crisis, as well as to measure the degree of expansive monetary policy transmission, regarding the use of basic interest rate instrument in economic growth. Econometric and regression methods are used. The data refer to the period 2000-2012, precisely to: the basic interest rate, monetary mass and GDP.

Suggested Citation

  • Mimoza Koka & Anilda Bozdo & Leontiev Çuçi, 2013. "The Impact Of The Interest Rate Policy On The Albanian Economic Growth," Romanian Economic Business Review, Romanian-American University, vol. 8(2), pages 22-36, June.
    • Handle: RePEc:rau:journl:v:8:y:2013:i:2:p:22-36
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    References listed on IDEAS

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    1. Ignazio Angeloni & Anil K. Kashyap & Benoit Mojon & Daniele Terlizzese, 2003. "Monetary Transmission in the Euro Area: Does the Interest Rate Channel Explain it All?," NBER Working Papers 9984, National Bureau of Economic Research, Inc.
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