The analysis of causality of economic growth and public debt in Albania

Abstract

Albania was able to mantain a level of economic growth and a macroeconomic stability during the last decade, but the high level of the public debt has had growing tendency during the last 5 years, thereby resulting to be enough concerning for a lot of foreign and native analysts in the field of economy.In this research we will study the role of public debt in the Albania’s economic growth for the period 2003-2014, and also the defining factors for these indicators. To discover this causality relationship between the variables it is aplied also the causality test Granger. From the Granger’s analysis, we resulted that we are dealing only with one causality in one direction, that moves from the economic growth, that moves from the economic growth towards the public debt. The theory of co-integration is used to discover if the relationship among the variables is stable and in long terms periods in a manner that the taken politcs in middle terms periods may be efficent also in long terms period.