The Effect of Economic Policies on Albanian GDP

Abstract

Policies applied nowadays are fiscal policy, monetary policy, income policy, and foreign relations policy, etc. This paper will analyze fiscal and monetary policy. How have those policies affected in the Albanian GDP in 2004-2015. The goal is to determine which of these policies is effective in economic growth and where we should aim in the future. Reached conclusion is simple, fiscal policies have limited impact on the growth of GDP. This is consistent with the theoretical model of a small open economy with a flexible exchange rate regime. Monetary policies have lower impacts on economic growth. This conclusion is contrary to theoretical impact on GDP. In the theoretical model, the monetary policies are fully effective in GDP growth, while fiscal policies have limited impact. This paper used the methods of analysis and synthesis, comparison of the description, are also used statistical methods.

DOI: 10.5901/ajis.2016.v5n3p55