The effects of external shocks on Azerbaijan economy

Nijat Guliyev ()
Additional contact information
Nijat Guliyev: Central Bank of Azerbaijan Republic

No 1802, Working Papers from Central Bank of Azerbaijan Republic

Abstract: This paper examines the effects of external shocks on the economy of oil rich Azerbaijan. Using oil price and macroeconomic indicators of three major trade partners of Azerbaijan – EU, Russia, and Turkey - as the external shock variables, we analyze the effects of those shocks on the domestic macroeconomic variables of Azerbaijan during the period from 2000Q1 to 2017Q4, in the SVAR framework with block exogeneity restriction. The results show that the overall importance of the four groups of shocks, in descending terms, is in the following order: oil shock, EU origin shocks, Russia origin shocks, and Turkey origin shocks. The major findings of the paper are: a) among considered foreign shocks oil price shock is the most important foreign shock for the economy of Azerbaijan; b) in general EU origin shocks has larger impact on considered domestic variables compared to other trade partners origin shocks; c) Turkey origin shocks have almost no impact in any of the considered domestic variables of Azerbaijan, d) among considered external shocks oil price is the main determinant of the non-oil sector of economy, and e) among considered external shocks GDP growth of the trade partners is the main determinant of the inflation in Azerbaijan.

Keywords: VAR; non-oil GDP; CPI inflation; oil price; external shock (search for similar items in EconPapers)
JEL-codes: C30 E10 E30 F60 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2018-09-27
New Economics Papers: this item is included in nep-cis, nep-cwa, nep-ene, nep-mac and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://uploads.cbar.az/assets/53f26bb60f02187e311ef5cba.pdf First version, 2018 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aze:wpaper:1802

Access Statistics for this paper

More papers in Working Papers from Central Bank of Azerbaijan Republic Contact information at EDIRC.
Bibliographic data for series maintained by Central Bank of Azerbaijan Republic ( this e-mail address is bad, please contact ).