IDEAS home Printed from https://ideas.repec.org/a/dug/journl/y2013i2p93-100.html
   My bibliography  Save this article

Factors that Affect Real Exchange Rate in the Long-Run and Short-Run in Albania

Author

Listed:
  • Edmira Cakrani

    (Universiteti I Vlorës Ismail Qemali, Albania)

Abstract

Real exchange rate is an important economic variable. RER behavior affects the economy in microeconomic terms defining the allocation of resources between the tradable sector and the non-tradable sector. RER affects economy also in macroeconomic terms, through its impact on key economic variables, such as economic growth, employment and inflation. But RER itself is affected by economic variables. The aim of this paper is to examine the economic variables that affect the level of the RER in Albania in long-run and short-run and the extent of influence of each of them. The Johansen cointegration test and Vector Error Correction Model are used to assess the impact of economic variables on real exchange rate. The results of the paper suggest that only relative productivity, trade openness and remittances affect real exchange rate in long-run, while in the short-run real exchange rate in Albania is affected by debt service, government spending, trade openness and remittances.

Suggested Citation

  • Edmira Cakrani, 2013. "Factors that Affect Real Exchange Rate in the Long-Run and Short-Run in Albania," EuroEconomica, Danubius University of Galati, issue 2(32), pages 93-100, September.
    • Handle: RePEc:dug:journl:y:2013:i:2:p:93-100
    as

    Download full text from publisher

    File URL: http://journals.univ-danubius.ro/index.php/euroeconomica/article/view/2116/1951
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dani Rodrik, 2008. "The Real Exchange Rate and Economic Growth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(2 (Fall)), pages 365-439.
    2. Carmen M. Reinhart & Graciela L. Kaminsky, 1999. "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems," American Economic Review, American Economic Association, vol. 89(3), pages 473-500, June.
    3. Ravn, Morten & Uribe, Martín & Schmitt-Grohé, Stephanie, 2007. "Explaining the Effects of Government Spending Shocks on Consumption and the Real Exchange Rate," CEPR Discussion Papers 6541, C.E.P.R. Discussion Papers.
    4. Elbadawi, Ibrahim A & Soto, Raimundo, 1997. "Real Exchange Rates and Macroeconomic Adjustment in Sub-Saharan Africa and Other Developing Countries," Journal of African Economies, Centre for the Study of African Economies, vol. 6(3), pages 74-120, Supplemen.
    5. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72(6), pages 584-584.
    6. Roberto FRENKEL, 2004. "Real exchange rate and employment in Argentina, Brazil, Chile and Mexico," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 19(223), pages 29-52.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Caputo, Rodrigo, 2015. "Persistent real misalignments and the role of the exchange rate regime," Economics Letters, Elsevier, vol. 135(C), pages 112-116.
    2. Zouheir Abida, 2011. "Real Exchange Rate Misalignment and Economic Growth: An Empirical Study for the Maghreb Countries," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 2, pages 45-61, July.
    3. Waqar Khalid & Javed Iqbal & Nosheen Nasir & Misbah Nosheen, 2024. "Do real exchange rate misalignments have threshold effects on economic growth? Asymmetric evidence from Pakistan," Economic Change and Restructuring, Springer, vol. 57(6), pages 1-40, December.
    4. Noureldin Diaa, 2018. "Much Ado about the Egyptian Pound: Exchange Rate Misalignment and the Path Towards Equilibrium," Review of Middle East Economics and Finance, De Gruyter, vol. 14(2), pages 1-19, August.
    5. Prabheesh, K.P. & Prakash, Branesh & Vuniivi, Viliame, 2023. "Assessment of Fiji’s exchange rate," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1282-1305.
    6. Schröder, Marcel, 2013. "Should developing countries undervalue their currencies?," Journal of Development Economics, Elsevier, vol. 105(C), pages 140-151.
    7. Ramos-Herrera, María del Carmen & Sosvilla-Rivero, Simón, 2023. "Economic growth and deviations from the equilibrium exchange rate," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 764-786.
    8. Esteban Javier Leguizamón & Pablo Alfredo Gluzmann, 2019. "Tipo de cambio real y crecimiento económico: Un análisis de robustez," Asociación Argentina de Economía Política: Working Papers 4162, Asociación Argentina de Economía Política.
    9. Frankel, Jeffrey, 2010. "Monetary Policy in Emerging Markets," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 25, pages 1439-1520, Elsevier.
    10. Heng, Dyna, 2011. "Capital flows and real exchange rate: does financial development matter?," MPRA Paper 48553, University Library of Munich, Germany, revised May 2012.
    11. Cécile Couharde & Carl Grekou & Valérie Mignon & Florian Morvillier, 2024. "Reconciling contrasting views on the growth effect of currency undervaluations," Working Papers hal-04568924, HAL.
    12. Ronald MacDonald & Flávio Vieira, "undated". "A panel data investigation of real exchange rate misalignment and growth," Working Papers 2010_13, Business School - Economics, University of Glasgow.
    13. Patrick Plane, 2021. "What Factors Drive transport and Logistics Costs in Africa ?," Working Papers hal-03198081, HAL.
    14. Rui Mao & Yang Yao, 2016. "Fixed Exchange Rate Regimes, Real Undervaluation, and Economic Growth," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 7(02), pages 1-35, June.
    15. Irfan Civcir, 2003. "Before the Fall, Was the Turkish Lira Overvalued?," Eastern European Economics, Taylor & Francis Journals, vol. 41(2), pages 69-99, March.
    16. Gasmi, Farid & Laourari, Imène, 2017. "Has Algeria suffered from the dutch disease?: Evidence from 1960–2013 data," TSE Working Papers 17-780, Toulouse School of Economics (TSE).
    17. Dumrongrittikul, Taya & Anderson, Heather M., 2016. "How do shocks to domestic factors affect real exchange rates of Asian developing countries?," Journal of Development Economics, Elsevier, vol. 119(C), pages 67-85.
    18. Mariarosaria Comunale & Francesco Paolo Mongelli, 2019. "Euro Area Growth and European Institutional Reforms," Bank of Lithuania Occasional Paper Series 24, Bank of Lithuania.
    19. Hernán Herrera-Echeverri & Jerry Haar & Alexander Arrieta Jiménez & Manuel Araújo Zapata, 2015. "Devaluation, Competitiveness And New Business Formation In Emerging Countries," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 20(03), pages 1-22, September.
    20. Kemme, David M. & Roy, Saktinil, 2006. "Real exchange rate misalignment: Prelude to crisis?," Economic Systems, Elsevier, vol. 30(3), pages 207-230, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:dug:journl:y:2013:i:2:p:93-100. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Florian Nuta (email available below). General contact details of provider: https://edirc.repec.org/data/fedanro.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.