Inflation and Money Growth: The Case of Albania

Abstract

The goal of this study was to test the relationship between inflation and money growth for Albania case, in the 
long run from to 1996 to 2008 years. The study it is conducted by analyzing the quantity theory of money, related 
this last with inflation. All this work is done by examining the economic events, mainly macroeconomic indicators 
during the 1996-2008 periods using Regression Analysis methodology. Next, it is compared the Albanian’s result 
with the other countries that have the same characteristics in the aspect of economical, social, political 
geographical as Albania country. When are investigated the result of those countries, we obtain a strong positive 
correlation between Inflation and Money Growth. The result have shown than, an excess injection of money 
supply was reflected by an increase in price level and via-versa. The crucial conclusion of this surveying was, 
quantifying the impact of money supply on the inflation rate in Albania, and uses it as a stage in order to make 
target for the inflation for the following years.