The Impact of Real Oil Price on Real Effective Exchange Rate: The Case of Azerbaijan

Using quarterly data from 2000-2007 and applying Error Correction Model and Johansen Co-integration Approaches I estimate the impact of real oil price on the real exchange rate of Azerbaijani manat. Estimation outputs derived from these approaches are very close to each other and indicate that real oil price has statistically significant positive impact on real exchange rate in the long-run. Besides, revealed that relative price as a proxy for productivity has also explanatory power in explaining long-run behavior of real exchange rate. Estimated Error Correction Term indicates that half-life of adjustment toward long-run equilibrium level takes 3-4 quarters. Since findings of this study occur as results of high fiscal expansion my policy suggestions mainly related to Fiscal policy implementations.Real effective exchange rate, Real oil price, Relative productivity, Azerbaijani manat, Dutch Disease, Oil-exporting Countries, Johansen Co-integration Approach, Error Correction Modeling, Half-life Speed

Technical efficiency under resource scarcity: Non-parametric approach Uzbekistan agriculture

Water scarcity and land degradation increases led to a sharp rise in input resource's costs. These developments make it increasingly difficult for agricultural farms to produce according to the demand for food and other commodities, especially owing a rapid population growth. The present study aims to focus on scarce resource use in the agricultural production of the Zarafshan valley by means of the efficiency analysis. A DEA model is estimated to investigate the farm level efficiency levels with respect to the use of the limited resources available to the farmers. By the application of linear programming methods a "best practice frontier is estimated‟, classifying farms on the frontier as efficient and others as inefficient with respect to different scales. Technical and allocative efficiencies are calculated relative to the frontier. Results shows input resources are not used efficiently and a great majority of farms could effectively reduce considerable amounts of input use by still producing the same output.Resource /Energy Economics and Policy,

Housing, Household Portfolio, and Intertemporal Elasticity of Substitution: Evidence from the Consumer Expenditure Survey

This paper investigates whether the inclusion of housing in a household portfolio is important to the household’s intertemporal decision making. Households hold portfolios of assets rather than a Treasury bill and/or a stock index and make their spending decisions based on expected total returns of an array of assets. The total returns account for capital gains, taxes, and inflation. In addition to financial assets such as stocks and bonds, we incorporate a real asset, residential housing, into a household portfolio. In particular, we estimate the intertemporal elasticity of substitution (IES), that is, how a change in asset or portfolio return affects household’s consumption growth, using a sample of households from the Consumer Expenditure Survey. Since changes in housing return can affect consumption of households over time, we investigate whether the inclusion of housing in the household portfolio provides different IES estimates. Moreover, utilizing a household-level data set, we estimate IES parameters for different groups of assetholders. Our results indicate that the housing return positively affects consumption growth, and housing is an important asset to account for in the household portfolio.intertemporal elasticity of substitution, intertemporal choice, consumption, housing, household portfolio

Analyzing price level in a booming economy: the case of Azerbaijan

The study analyzes price level in Azerbaijan economy over the period of 2000-2007 by employing a specific approach. The paper concludes that price increases caused by a resource boom differs from the price increases generated by a non-booming economy. Thereby, inflation mainly caused by resource boom has its own specific features in terms of impact on economy and therefore requires specific policy response. Some policy recommendations related to monetary and fiscal policies are suggested for elimination of harmful effects of resource boom and for preventing high price level in Azerbaijani economy.Oil boom, Dutch Disease, Price level, Azerbaijan economy, Bound Testing Approach.

The impact of real oil price on real effective exchange rate: The case of Azerbaijan

Using quarterly data from 2000-2007 and applying Error Correction Model and Johansen Co- integration Approaches I estimate the impact of real oil price on the real exchange rate of Azerbaijani manat. Estimation outputs derived from these approaches are very close to each other and indicate that real oil price has statistically significant positive impact on real exchange rate in the long-run. Besides, revealed that relative price as a proxy for productivity has also explanatory power in explaining long-run behavior of real exchange rate. Estimated Error Correction Term indicates that half-life of adjustment toward long-run equilibrium level takes 3-4 quarters. Since findings of this study occur as results of high fiscal expansion my policy suggestions mainly related to Fiscal policy implementations.Real effective exchange rate, Real oil price, Relative productivity, Azerbaijani manat, Dutch Disease, Oil-exporting Countries, Johansen Co-integration Approach, Error Correction Modeling, Half-life Speed

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

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.Azerbaijani economy, Non-oil export, Real effective exchange rate, Non-oil GDP, Dutch Disease, Vector Error Correction Model.

Relationship between inflation and economic growth in Azerbaijani economy: is there any threshold effect?

The study examines possibility of threshold effect of inflation on economic growth over the period of 2000-2009. Estimated threshold model indicates that there is a non-linear relationship between economic growth and inflation in the Azerbaijani economy and threshold level of inflation for GDP growth is 13 percent. Below threshold level inflation has statistically significant positive effect on GDP growth, but this positive relationship becomes negative one when inflation exceeds 13 percent. Results of the study may be useful for monetary policymakers in terms of keeping inflation below the threshold level of 13 percent to prevent its negative effect on economic growth.Azerbaijani Economy, Inflation, Economic Growth, Gross Fixed Capital Formation, Threshold Level