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Inflation, its Dynamics, and its Possible Causes in Albania


  • Kunst, Robert M.

    (Institute for Advanced Studies, Vienna)

  • Luniku, Rubin

    (Bank of Albania)


This paper attempts to analyze the causes of the inflationary developments in Albania in the years 1994-1997 with the help of econometric methods. We consider monetary and fiscal expansion, imported inflation, and direct demand pull as possible causes. Except for significant effects of direct demand pull and of exchange rate devaluation, the statistical results give only moderate support to the classical economic causes. Seen this way, Albanian inflation appears to be mainly determined by its own expectations and by singular political events.

Suggested Citation

  • Kunst, Robert M. & Luniku, Rubin, 1998. "Inflation, its Dynamics, and its Possible Causes in Albania," East European Series 57, Institute for Advanced Studies.
  • Handle: RePEc:ihs:ihsrop:57

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    More about this item


    Transition economy; Causality; Coitegration; Consumer price index;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy


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