Government Spending and Real Exchange Rate Case of Albania

Authors

  • Edmira Cakrani
  • Pranvera Resulaj
  • Luciana Koprencka (Kabello)

DOI:

https://doi.org/10.14207/ejsd.2013.v2n4p303

Abstract

Various studies have found that governmentspending can lead to overestimation orunderestimation of the real exchange rate, depending on the composition of theseexpenditures. The purpose of this paper is toassess the impact of government spendingon real exchange rate in Albania. In this paper is used a log liner model with quarterlydata. Other explanatory variables in this model are: foreign direct investment, remittances,real GDP per capita, openness. Variables are tested for unit root and cointegration. Theresults indicate that government spendingis associated with overvaluation of realexchange rate in Albania.JEL Classification: E62; F31Various studies have found that governmentspending can lead to overestimation orunderestimation of the real exchange rate, depending on the composition of theseexpenditures. The purpose of this paper is toassess the impact of government spendingon real exchange rate in Albania. In this paper is used a log liner model with quarterlydata. Other explanatory variables in this model are: foreign direct investment, remittances,real GDP per capita, openness. Variables are tested for unit root and cointegration. Theresults indicate that government spendingis associated with overvaluation of realexchange rate in Albania.

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Published

2013-04-01

How to Cite

Cakrani, E., Resulaj, P., & Koprencka (Kabello), L. (2013). Government Spending and Real Exchange Rate Case of Albania. European Journal of Sustainable Development, 2(4), 303. https://doi.org/10.14207/ejsd.2013.v2n4p303

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Articles