The relationship between the depreciation of the national currency and the trade balance in a long term period.
Doc. Ines Dika, Msc. Gjergji Xhabija, Msc. Elona Fejzaj
The Albanian economy has now a high level of integration with the rest of the economic world. This fact is quite obvious even if we refer to the indicators of the balance of payments and especially to the trade balance. The trade balance represents all the export and import transactions realized by the Albanian economy during a certain period of time. The balance of payments as a statistical overview, throughout its elements, constitutes one of the most important indicators of an economy. The economic direction of a country reflects the importance of each part of the balance of payments.
The trade balance includes all the imports and exports of goods that our country realizes with other countries of the world. The effects of the deficit fluctuation or the covering ratio of imports by exports, can be caused by plenty of reasons, which can be classified into two categories: internal and external factors. Theory and practice of most developed countries have shown that depreciation or appreciation of the local currency contributes to the improvement or worsening of the indicators of the trade balance among a medium-long term period. The aim of this paper is to analyze using an econometric model that will clearly certify the relationship between the depreciation of the national currency and the trade balance in a long term period.