The Albanian economy after the 90 'S entered

The objective of the study is the analysis of IS-LM curves. The aim is to prove that the current theoretical models of IS-LM are not applicable in the Albanian economy. In this paper, the theoretical IS-LM model is analyzed according to the balance of I = S (investment - savings), and AE = Y (aggregate expenditure - gross domestic product). The models I + G = S + T and NX = NFI are not analyzed in this study. Two representative models were obtained, by the authors Hicks - Hansen and Dornbusch - Fischer - Startz. The theoretical and practical aspects of the application of the models are analyzed. The defect of the Dornbusch-Fischer-Startz model and the impossibility of applying it to the data of the Albanian economy is evident. The authors have proposed an improvement of the Hicks-Hansen model for the IS curve because the theoretical model is not applicable. They have replaced the half where Investment equals Savings with a reflection curve of the opportunity cost. This has made the model effective. In the analysis, two of the features of the Albanian economy were taken into consideration: the structure of the currency market where half of it is covered by foreign currency (euro and dollar), and the informal economy that affects the exchange rates and the effectiveness of the policies of the Bank of Albania. In the material, it is found that the transmission effect of the monetary policies implemented by the Bank of Albania is missing. There are weak connections between the rate of REPOs, monetary aggregates and some of the macroeconomic indicators. The rate of inflation and the rate of REPOs are strongly related to the first direction. Recommended; to apply the IS model according to the proposal made by the authors, to realize the de-euroization of the market, to change the objective of the Central Bank, putting as the main objective the preservation of the exchange rate of All in function of economic growth and financial stability. In the analysis, the method of comparison, description, analytical methods and statistical methods are used. Used Data is from INSTAT and the Central Bank of Albania.   Received: 18 July 2022 / Accepted: 25 August 2022 / Published: 2 September 2022

This paper investigates the average impact of government debt on long-term GDP growth in four Western Balkan countries of Albania, Serbia, Macedonia, and Bosnia & Herzegovina over a 23-year period from 1997-2019. It examines the use of financing through debt on short- and long-term economic growth for these economies using a dynamic common correlated effects model with heterogeneous coefficients. The model's methodology estimation mimics Chudik and Pesaran and the pooled mean group estimator is used. The conclusion of this study, with respect to the average impact of government debt on long-term GDP growth in the four Western Balkan countries, is consistent with the literature in that in the long-term external debt does not contribute to long-term growth and, in fact, tends to have a negative impact. The COIVD-19 pandemic has exacerbated the long-term growth outlook for the four Western Balkan countries.   Received: 21 December 2021 / Accepted: 22 February 2022 / Published: 5 March 2022

The banking sector in Albania since the 90s had the aim of adapting the change of the economic relations of private property. It was decided to adapt a two-tiered system, similar to that of Western Europe, the Central Bank as the first level bank and commercial banks considered as level second banks. In this paper we will address the role of exchange rates in the rate of economic policy support the growth of economy. The conclusion of the material in concrete terms is that the exchange rate should be fixed and not flexible, because the role of the Central Bank shall be limited to the money market as a result of the free circulation of the euro and the dollar. Public expenditure in terms of realization of flexible exchange rates have no impact on economic growth. In this way, with flexible exchange rates, the limited impact of the Central Bank and the lack of influence of government have meant that the role of economic policy in the improvement of macroeconomic indicators is very small. They have little impact on GDP growth, reduce unemployment rate and inflation stability. These indicators, in the condition in which it is located, the Albanian economy, are evaluated when the currency is concentrates in the Central Bank and when applying fixed exchange rates.