Material category : Not Periodic Publications / Working Papers
This paper revisits the monetary transmission mechanism in
Albania, summarizing findings of previous studies and presenting
new evidence based on a SVAR estimation. We investigate the
effect of monetary transmission channels on aggregate output
and headline and core inflation. We conclude that the exchange
rate channel is not as strong as reported in previous works, and
that the money and expectations channel play the most important
role within the transmission mechanism. Our findings also suggest
that the Bank of Albania should pay attention to the exchange
rate fluctuations, as they seem to have an adverse impact on real
output fluctuations.