What About Monetary Transmission in Albania? Is the Exchange Rate Pass-Through (Still) the Main Channel?
Proceedings of Banka e Shqipërisë (Central Bank of Albania) Central Banking in the Time of Integration, 2005
23 Pages Posted: 29 May 2011
Date Written: March 1, 2005
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.
JEL Classification: E52, E4
Suggested Citation: Suggested Citation