Blisard ZANI: STAGFLATION – AS A RISK THAT ACCOMPANIES THE FUTURE OF THE ALBANIAN ECONOMY

Dissertation Title: STAGFLATION – AS A RISK THAT ACCOMPANIES THE FUTURE OF THE ECALBANIAN ONOMY

Author: Blisard ZANI
Institution: University of Tirana, Faculty of Economics, Department of Finance
Field of study: Finance
Publication date: 07.01.2026
The dissertation is published in Albanian.

© Copyright: Blizzard ZANI

Published by the University of Tirana
Based on legal acts, regulations and policies of the UT

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Abstract:

Over the past three decades, the Albanian economy has undergone dynamic changes in terms of organization, economic structure and indicators that evaluate the economy as a whole. Within the macroeconomic framework, some of the main indicators such as inflation, unemployment and economic growth occupy a special role. In conditions of economic cycle fluctuations, the combination of increased inflation, rising unemployment and economic decline shows the tendency of the presence of the phenomenon of stagflation within an economy. This dissertation presents an in-depth theoretical presentation of the prerequisites of stagflation, the main ideas of the basic schools of thought regarding the phenomenon of stagflation, the emergence of this phenomenon, as well as the main factors that impact it.

In the following, the paper estimates the Misery Index for the time series of data for the Albanian economy according to three different methodologies, and calculates for the first time a Weighted Stagflation Index for the economic reality of Albania. In addition, the dissertation also presents a forecasting model (ARMA) confirming the presence of a significant risk of stagflation in the future of our country's economy. To complete the analysis of the consequences of stagflation in the economy, a structured vector autoregressive model (SVAR) was analyzed to measure the effects of nominal and real shocks on the exchange rate between the euro and the lek, as well as on the nominal and real average interest rates on loans for the Albanian economy in the last three decades.

This dissertation draws some valuable conclusions regarding the phenomenon of stagflation in the Albanian economy, as well as recommends some practical solutions within the framework of macrofiscal policies that should be undertaken by financial policy-making institutions in Albania.

Field:

FINANCE (Macro Finance)

Keywords:

Stagflation, Misery Index, Weighted Stagflation Index, ARMA model, SVAR model, etc.

Extended

Over the past three decades, the Albanian economy has undergone dynamic changes in terms of organization, economic structure, and the indicators used to assess the economy as a whole. Within the macroeconomic framework, some of the key indicators such as inflation, unemployment, and economic growth hold a pivotal role. In the context of economic cycle fluctuations, the combination of rising inflation, increasing unemployment and economic decline reveals the tendency of stagflation to emerge within an economy. This dissertation presents an in-depth theoretical overview of the preconditions for stagflation, the main ideas of the major schools of thought, its emergence and the key factors that influence it.

Furthermore, the study evaluates the Misery Index using time series data for the Albanian economy based on three different methodologies, and for the first time calculates a Weighted Stagflation Index for Albania's economic data. Moreover, the dissertation also presents a forecasting model (ARMA), confirming the presence of a significant moderate risk of stagflation in the future of the country's economy. To complete the analysis of the effects of stagflation on the economy, a structured vector autoregression model (SVAR) is used to measure the impact of nominal and real shocks on the exchange rate between the euro and the Albanian lek, as well as on the nominal and real average interest rates on loans in the Albanian economy over the past three decades.

This dissertation draws several valuable conclusions regarding the phenomenon of stagflation in the Albanian economy and recommends practical solutions within the framework of macro-fiscal policies that should be undertaken by the country's financial policymaking institutions.

Field of study:

FINANCE (Macro Finance)

Keywords:

Stagflation, Misery Index, Weighted Stagflation Index, ARMA model, SVAR model, etc.