Altin Zefi – European University of Tirana, Blv. Gjergj Fishta, Tirana, Albania


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 – Belgrade, Serbia;

ISBN 978-86-80194-20-2, ISSN 2683-5568, DOI:


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
Albania’s 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 Albania’s central Bank monetary policy is not as accommodative
and expansionary as it’s indicated in the central bank’s public announcements.

Key words

Monetary policy, natural rate of interest, negative interest rate, real interest rate.


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