The Impact of Real Effective Exchange Rate on the Non-oil Export: The Case of Azerbaijan

Fakhri, Hasanov (2010): The Impact of Real Effective Exchange Rate on the Non-oil Export: The Case of Azerbaijan. Forthcoming in: Economic Journal of Economic Cooperation Organization No. 2nd issue

Abstract

The paper investigates the impact of the real exchange rate on non-oil exports in Azerbaijan by applying Vector Error Correction Model. The estimation results suggest that real exchange rate of manat has negative impact on non-oil export performance while non-oil GDP affects positively in the long- and short-run. Error correction term indicates that short-run fluctuation can be adjusted into long-run equilibrium relationship. Based on findings of the study can be concluded that appreciating real exchange rate is one of major factors that impede non-oil export growth. Since promotion of non-oil export is one of the urgent issues of the strategic economic policy of Azerbaijan Republic then findings of the study may be useful for policymakers.

• Item Type: MPRA Paper
• Language: English
• Keywords: Azerbaijani economy, Non-oil export, Real effective exchange rate, Non-oil GDP, Dutch Disease, Vector Error Correction Model.
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O24 - Trade Policy ; Factor Movement Policy ; Foreign Exchange Policy; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics; P - Economic Systems > P2 - Socialist Systems and Transitional Economies > P28 - Natural Resources ; Energy ; Environment

References

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