Altin Zefi – European University of Tirana, Blv. Gjergj Fishta, Tirana, Albania
DOI: https://doi.org/10.31410/ERAZ.2019.159
5th International Conference – ERAZ 2019 – KNOWLEDGE BASED SUSTAINABLE DEVELOPMENT, Budapest – Hungary, May 23, 2019, CONFERENCE PROCEEDINGS
Published by: Association of Economists and Managers of the Balkans – Belgrade, Serbia
Conference partners: Faculty of Economics and Business, Mediterranean University, Montenegro; University of National and World Economy – Sofia, Bulgaria; Faculty of Commercial and Business Studies – Celje, Slovenia; Faculty of Applied Management, Economics and Finance โ Belgrade, Serbia;
ISBN 978-86-80194-20-2, ISSN 2683-5568, DOI: https://doi.org/10.31410/ERAZ.2019
Abstract
We use univariate methods to measure the natural rate of interest for Albania. Natural rate
of interest is an important tool in monetary policy. It has been described as the rate that provides price
stability and full employment. The natural rate of interest is widely used as an indicator for the monetary
policy. A policy interest rate below the natural rate of interest is seen as expansionary, while a
policy interest rate by a Central bank, is seen as contractionary for the monetary policy. We find that
Albaniaโs natural rate of interest is below zero while the real interest rate is also below zero but close to
the natural rate of interest. We conclude that Albaniaโs central Bank monetary policy is not as accommodative
and expansionary as itโs indicated in the central bankโs public announcements.
Key words
Monetary policy, natural rate of interest, negative interest rate, real interest rate.
References
[1] Brian Blackstone, (2019) Negative Rates, Designed as a Short-Term Jolt, Have Become an
Addiction, wsj.com
[2] Knut Wicksell, (1936) Interest and Prices: A Study of the Causes Regulating the Value of
Money, 1898, English translation, London: Macmillan and Company, p. 102.
[3] Thomas A. Lubik and Christian Matthes (2015): Calculating the Natural Rate of Interest:
A Comparison of Two Alternative Approaches
[4] Michael Woodford, (2003), Interest and Prices: Foundations of a Theory of Monetary Policy,
Princeton, N.J.: Princeton University Press.
[5] Warren Mosler and Mathew Forstater, (2004) The Natural Rate of Interest is Zero 2004
Working Paper No. 37
[6] Thomas Laubach, John Williams, (2015) Natural-interest-rate-redux, Federal Reserve
Bank of San Francisco
[7] Thomas Laubach and John Williams, (2001) Measuring the natural rate of interest, Board
of Governors of the Federal Reserve System.
[8] Vasilika Kota, (2007) Alternative methods of estimating potential output in Albania
[9] Vuslas Us, (2018) Measuring the Natural Interest Rate for the Turkish Economy
[10] Janet Yellen, (2015) The economic outlook and the monetary policy, Economic Club of
Washington
[11] Moritz Schularick, Alan M. Taylor, (2010) Credit Booms Gone Bust: Monetary Policy,
Leverage Cycles and Financial Crises, 1870โ2008*
[12] Alejandro Justiniano and Giorgio E. Primiceri, (2010) Measuring the equilibrium real
interest rate
[13] Karel Havik, Kieran Mc Morrow, Fabrice Orlandi, Christophe Planas, Rafal Raciborski,
Werner Rรถger, Alessandro Rossi, Anna Thum-Thysen, Valerie Vandermeulen, (2014) The
Production Function Methodology for Calculating Potential Growth Rates & Output Gaps
[14] Genti Sejko, Governor or Central Bank of Albania, (2019) Monitor.al: E ardhmja dhe
sfidat e ekonomisรซ e sistemit bankar