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What about monetary transmission in Albania? Is the exchange rate pass-through (still) the main channel?

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  • Peeters, Marga

Abstract

There seems to be a general perception that the exchange rate pass-through is the most important channel in the transmission process of monetary policy in Albania. This perception is questioned here in light of the altering relationships in this developing economy. A discussion on the transmission channels in the Albanian economy is followed by a study of the macro-economic relationships and pragmatic econometrics quantifying the monetary effectiveness. The results indicate that the dollar has become less important in the monetary transmission process at the benefit of the euro. There are moreover strong signs that the exchange rate channel as such is loosing its influence at the benefit of the other transmission channels, like the credit channel and most likely the wage channel.

Suggested Citation

  • Peeters, Marga, 2005. "What about monetary transmission in Albania? Is the exchange rate pass-through (still) the main channel?," MPRA Paper 23671, University Library of Munich, Germany, revised 24 Oct 2005.
    • Handle: RePEc:pra:mprapa:23671
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    File URL: https://mpra.ub.uni-muenchen.de/23671/1/MPRA_paper_23671.pdf
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    References listed on IDEAS

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    1. Bahmani-Oskooee, Mohsen & Kara, Orhan, 2000. "Exchange rate overshooting in Turkey," Economics Letters, Elsevier, vol. 68(1), pages 89-93, July.
    2. Darvas, Zsolt, 2001. "Exchange rate pass-through and real exchange rate in EU candidate countries," Discussion Paper Series 1: Economic Studies 2001,10, Deutsche Bundesbank.
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    Cited by:

    1. Erjon Luci & Marta Muco & Elvira Sojli, 2006. "Euroisation in Albania: From Spontaneous to Consensual," wiiw Balkan Observatory Working Papers 71, The Vienna Institute for International Economic Studies, wiiw.
    2. Gerti Shijaku, 2015. "The Macroeconomic Pass-through Effects of Monetary Policy through Sign Restrictions Approach: In the Case of Albania," IHEID Working Papers 11-2015, Economics Section, The Graduate Institute of International Studies.

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    More about this item

    Keywords

    monetary policy; monetary transmission; exchange rate pass-through; interest rates;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

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