Given calculates the exchange rate as being robust

Given that the exchange rates in many
industrial and developing countries have shown substantial fluctuations over
the last decades, there has certainly been a considerable interest in
identifying the factors that have been the cause of these moves. An important
part of this study is exactly this issue, the study of exchange rate
equilibrium and the economic factors converging in the same direction.

Two are the most important methods used for
the valuation of the exchange rate equilibrium influenced by various economic
factors. One method is that of the macroeconomic balance which calculates the
exchange rate as being robust with the country’s economy as a whole, producing
with the production capacity and we calculate is as the core exchange rate(FEER).

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Certainly this model has been used in many
other studies over the years, and an elaboration and extension of this model is
brought from the authors Isard and Faruquee.

While an alternative model that already
includes an econometric analysis of the exchange rate equilibrium behavior is
the BEER model. Through this model, we get an evasion indicator that is
different from that of the FEER model, as this indicator is related to the
deviation through the current exchange rate and the value resulting from the
equilibrium estimated from the exchange rate and economic factors.

The empirical literature tells us that
Clark and MacDonald in 1999 used the many factorial method Johansen to
construct the REER estimated by the BEER method for the US dollar, the German
mark and the Japanese yen.

The
direct application of this model resulted in an indicator called the actual
avoidance, the difference between the current exchange rate exchange and its
estimated level through the actual values ??of the economic factors.

But given that the actual values ??of these
factors can be divided into steady or long-term levels, it is more valuable to
calculate and total avoidance, which is the difference between the actual rate
and the estimated value of the sustained or long-term values ??of economic
factors.

The real exchange rate (RER) is considered
to be an important economic indicator and its importance has been estimated
since after the Bretton Woods system collapse, where between different
countries there cannot be equal prices of the basket of goods. As such, the
exchange rate is seen as an indicator that measures the level of
competitiveness of a country.

Exchange rate fluctuations, the appreciation and depreciation of the domestic currency against the foreign currency basket may be caused by the situation of several economic factors in the country, but also by a fluctuated exchange rate with course divergence, which certainly has an impact on the economic situation of the country and the business sector. So this phenomenon is seen as a double bond.

Unemployment is a big economic and social issue for each
country, especially for Albania since it is a country that comes from a
centralized system where the state ensured full employment.

During 2002-2009 Albania achieved a solid economic growth. Strong
domestic demand and support by significant flows of foreign direct investments
affected the fast pace of economic growth.

The capita per GDP in nominal terms was more than doubled over
the period and there were also improvements in human development indicators. Albania
has succeeded in different aspects like reducing government debt, tax revenue
was increased unemployment was lowered and dealing with a lower inflation.