IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/29556.html
   My bibliography  Save this paper

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

Author

Listed:
  • Fakhri, Hasanov

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.

Suggested Citation

  • Fakhri, Hasanov, 2010. "The Impact of Real Effective Exchange Rate on the Non-oil Export: The Case of Azerbaijan," MPRA Paper 29556, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:29556
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/29556/1/MPRA_paper_29556.pdf
    File Function: original version
    Download Restriction: no
    File URL: https://mpra.ub.uni-muenchen.de/79559/1/MPRA_paper_29556.pdf
    File Function: revised version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Helen B. Junz & Rudolf R. Rhomberg, 1973. "Price competitiveness in export trade among industrial countries," International Finance Discussion Papers 22, Board of Governors of the Federal Reserve System (U.S.).
    2. Junz, Helen B & Rhomberg, Rudolf R, 1973. "Price Competitiveness in Export Trade Among Industrial Countries," American Economic Review, American Economic Association, vol. 63(2), pages 412-418, May.
    3. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    4. Oyejide, T. Ademola., 1986. "The effects of trade and exchange rate policies on agriculture in Nigeria.:," Research reports 55, International Food Policy Research Institute (IFPRI).
    5. WenShwo Fang & YiHao Lai & Stephen M. Miller, 2005. "Export Promotion through Exchange Rate Policy: Exchange Rate Depreciation or Stabilization?," Working papers 2005-07, University of Connecticut, Department of Economics.
    6. Adubi, A.A. & Okunmadewa, F., 1999. "Price, Exchange Rate Volatility and Nigeria's Agricultural Trade Flows: a Dynamic Analysis," Papers 87, African Economic Research Consortium.
    7. Athukorala, Premachandra, 1991. "Exchange rate pass-through : The case of Korean exports of manufactures," Economics Letters, Elsevier, vol. 35(1), pages 79-84, January.
    8. Mohsen Bahmani-Oskooee & Orhan Kara, 2003. "Relative Responsiveness of Trade Flows to a Change in Prices and Exchange Rate," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(3), pages 293-308.
    9. Yusuf, Adesina Sulaiman & Edom, Cyprian .O, 2007. "Determinants of timber exports in Nigeria: an error correction modeling approach," MPRA Paper 2608, University Library of Munich, Germany.
    10. Bayoumi, Tamim, 1998. "Estimating Trade Equations from Aggregate Bilateral Data," CEPR Discussion Papers 1970, C.E.P.R. Discussion Papers.
    11. Usman Haleem & Khalid Mushtaq & Azhar Abbas & A. D. Sheikh, 2005. "Estimation of Export Supply Function for Citrus Fruit in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 44(4), pages 659-672.
    12. Athukorala, Premachandra & Menon, Jayant, 1994. "Pricing to Market Behaviour and Exchange Rate Pass-Through in Japanese Exports," Economic Journal, Royal Economic Society, vol. 104(423), pages 271-281, March.
    13. Rose, Andrew K., 1990. "Exchange rates and the trade balance : Some evidence from developing countries," Economics Letters, Elsevier, vol. 34(3), pages 271-275, November.
    14. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    15. Wang, Kai-Li & Barrett, Christopher B., 2002. "A New Look At The Trade Volume Effects Of Real Exchange Rate Risk," Working Papers 14751, Cornell University, Department of Applied Economics and Management.
    16. Juselius, Katarina, 2006. "The Cointegrated VAR Model: Methodology and Applications," OUP Catalogue, Oxford University Press, number 9780199285679.
    17. Dorosh, Paul & Valdés, Alberto, 1990. "Effects of exchange rate and trade policies on agriculture in Pakistan:," Research reports 84, International Food Policy Research Institute (IFPRI).
    18. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    19. Mr. Tihomir P Stucka, 2004. "The Effects of Exchange Rate Change on the Trade Balance in Croatia," IMF Working Papers 2004/065, International Monetary Fund.
    20. Menon, Jayant, 1995. "Exchange Rate Pass-Through," Journal of Economic Surveys, Wiley Blackwell, vol. 9(2), pages 197-231, June.
    21. Levy-Yeyati, Eduardo & Sturzenegger, Federico, 2005. "Classifying exchange rate regimes: Deeds vs. words," European Economic Review, Elsevier, vol. 49(6), pages 1603-1635, August.
    22. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
    23. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
    24. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    25. Augustine Arize & John Malindretos & Krishna Kasibhatla, 2003. "Does exchange-rate volatility depress export flows: The case of LDCs," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 9(1), pages 7-19, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Awoderu, Babalola Kayode & Abu, Orefi & Asogwa, Benjamin Chijioke, 2022. "Econometric Analysis of Agricultural Raw Material Exports, Exchange Rate and External Reserves in Nigeria," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 10(1), January.
    2. Ekundayo Peter Mesagan & Kolawole Kushimo & Dominic Ikoh Umar, 2021. "Do fluctuations in exchange rate hinder non-oil export? An analysis of agriculture and manufacturing in Nigeria," SN Business & Economics, Springer, vol. 1(11), pages 1-23, November.
    3. Nakorji Musa & Oji-okoro Izuchukwu & Seyi Saint Akadiri, 2024. "Assessment of exchange rate determination in a mono-resource economy: A case of Nigeria," Journal of Economic Analysis, Anser Press, vol. 3(2), pages 101-120, June.
    4. Niftiyev, Ibrahim, 2020. "Analysis of Inflation Trends in Urban and Rural Parts of Azerbaijan: Main Drivers and Links to Oil Revenue," EconStor Preprints 226217, ZBW - Leibniz Information Centre for Economics.
    5. Hasanov, Fakhri, 2012. "The impact of the real exchange rate on non-oil exports. Is there an asymmetric adjustment towards the equilibrium?," MPRA Paper 43728, University Library of Munich, Germany.
    6. Niftiyev, Ibrahim, 2022. "The Dutch Disease Syndrome Side Effects in Manufacturing Employment: A VAR Analysis of the Azerbaijan Economy," EconStor Conference Papers 266654, ZBW - Leibniz Information Centre for Economics.
    7. Alley, Ibrahim, 2018. "Oil price and USD-Naira exchange rate crash: Can economic diversification save the Naira?," Energy Policy, Elsevier, vol. 118(C), pages 245-256.
    8. Elkhan Richard Sadik-Zada & Wilhelm Loewenstein & Yadulla Hasanli, 2021. "Production linkages and dynamic fiscal employment effects of the extractive industries: input-output and nonlinear ARDL analyses of Azerbaijani economy," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 34(1), pages 3-18, April.
    9. Niftiyev, Ibrahim, 2022. "Textile and Chemical Subsectors in the Azerbaijani Economy: A Descriptive Glance at Possible De-Industrialization," EconStor Preprints 250900, ZBW - Leibniz Information Centre for Economics.
    10. Hasanov, Fakhri & Huseynov, Fariz, 2013. "Bank credits and non-oil economic growth: Evidence from Azerbaijan," International Review of Economics & Finance, Elsevier, vol. 27(C), pages 597-610.
    11. Niftiyev, Ibrahim, 2018. "De-Industrialization Patterns of Azerbaijan: Potential Outcomes of Dutch Disease Syndrome," EconStor Preprints 227733, ZBW - Leibniz Information Centre for Economics.
    12. Niftiyev, Ibrahim, 2020. "Descriptive Analysis of Employment In Azerbaijan: Possibilities of the Dutch Disease," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 77(1), pages 100-112.
    13. Megdam Khalil Ibrahim Khalil & Li Xiumin, 2014. "Identifying the Impact of RMB and SDG Exchange Rate Variability on the Trade Value between China and Sudan (1986-2012)," Journal of Empirical Economics, Research Academy of Social Sciences, vol. 2(3), pages 141-158.
    14. Niftiyev, Ibrahim, 2020. "The De-industrialization Process In Azerbaijan: Dutch Disease Syndrome Revisited," EconStor Conference Papers 227485, ZBW - Leibniz Information Centre for Economics.
    15. Ibrahim Niftiyev & Natavan Namazova, 2020. "Analysis of Cyclicality in the Azerbaijan Economy: Results of the Chi-Square Test," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 6(2), pages 122-134, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fang, WenShwo & Lai, YiHao & Thompson, Henry, 2007. "Exchange rates, exchange risk, and Asian export revenue," International Review of Economics & Finance, Elsevier, vol. 16(2), pages 237-254.
    2. WenShwo Fang & YiHao Lai & Stephen M. Miller, 2005. "Export Promotion through Exchange Rate Policy: Exchange Rate Depreciation or Stabilization?," Working papers 2005-07, University of Connecticut, Department of Economics.
    3. H. Bayram Irhan & Nur Dilbaz Alacahan & Levent Korap, 2011. "An Empirical Model for the Turkish Trade Balance: New Evidence from ARDL Bounds Testing Analyses," Istanbul University Econometrics and Statistics e-Journal, Department of Econometrics, Faculty of Economics, Istanbul University, vol. 14(1), pages 38-61, May.
    4. Mukesh Kumar & Azeema Begam & Nargis, 2020. "The Impact of Currency Depreciation on Exports of SAARC Countries," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 8(1), pages 16-29, March.
    5. Muqun Li & Wei Liu & Shunfeng Song, 2010. "Export Relationships among China, Japan, and South Korea," Review of Development Economics, Wiley Blackwell, vol. 14(s1), pages 547-562, August.
    6. Peter Rowland, 2003. "Exchange Rate Pass-Through To Domestic Prices: The Case Of Colombia," Borradores de Economia 2683, Banco de la Republica.
    7. Hasanov, Fakhri & Mammadov, Fuad, 2010. "The Role of the Fiscal Policy in the Development of the Non-Resource," MPRA Paper 65571, University Library of Munich, Germany.
    8. WenShwo Fang & Stephen Miller, 2007. "Exchange rate depreciation and exports: the case of Singapore revisited," Applied Economics, Taylor & Francis Journals, vol. 39(3), pages 273-277.
    9. R. Scott Hacker & Abdulnasser Hatemi‐J, 2004. "The effect of exchange rate changes on trade balances in the short and long run," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(4), pages 777-799, December.
    10. Gokhan H. Akay & Atilla Cifter & Ozdemir Teke, 2017. "Turkish tourism, exchange rates and income," Tourism Economics, , vol. 23(1), pages 66-77, February.
    11. Kerry Patterson & Michael A. Thornton, 2013. "A review of econometric concepts and methods for empirical macroeconomics," Chapters, in: Nigar Hashimzade & Michael A. Thornton (ed.), Handbook of Research Methods and Applications in Empirical Macroeconomics, chapter 2, pages 4-42, Edward Elgar Publishing.
    12. Peter Rowland, 2003. "Exchange Rate Pass-Throught to Domestic Prices: The Case of Colombia," Borradores de Economia 254, Banco de la Republica de Colombia.
    13. Olugbenga Onafowora, 2003. "Exchange rate and trade balance in east asia: is there a J-curve?," Economics Bulletin, AccessEcon, vol. 5(18), pages 1-13.
    14. Fakhri J. Hasanov & Lester C. Hunt & Ceyhun I. Mikayilov, 2016. "Modeling and Forecasting Electricity Demand in Azerbaijan Using Cointegration Techniques," Energies, MDPI, vol. 9(12), pages 1-31, December.
    15. Hauser, Shmuel & Kedar-Levy, Haim & Milo, Orit, 2022. "Price discovery during parallel stocks and options preopening: Information distortion and hints of manipulation," Journal of Financial Markets, Elsevier, vol. 59(PA).
    16. Neil R. Ericsson, 2021. "Dynamic Econometrics in Action: A Biography of David F. Hendry," International Finance Discussion Papers 1311, Board of Governors of the Federal Reserve System (U.S.).
    17. Garg, Bhavesh & Prabheesh, K.P., 2021. "Testing the intertemporal sustainability of current account in the presence of endogenous structural breaks: Evidence from the top deficit countries," Economic Modelling, Elsevier, vol. 97(C), pages 365-379.
    18. Sushanta Mallick & Helena Marques, 2008. "Passthrough of Exchange Rate and Tariffs into Import Prices of India: Currency Depreciation versus Import Liberalization," Review of International Economics, Wiley Blackwell, vol. 16(4), pages 765-782, September.
    19. Emmanouil Mavrakis & Christos Alexakis, 2018. "Statistical Arbitrage Strategies under Different Market Conditions: The Case of the Greek Banking Sector," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 17(2), pages 159-185, August.
    20. Erdal Demirhan & Banu Demirhan, 2015. "The Dynamic Effect of ExchangeRate Volatility on Turkish Exports: Parsimonious Error-Correction Model Approach," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(4), pages 429-451, September.

    More about this item

    Keywords

    Azerbaijani economy; Non-oil export; Real effective exchange rate; Non-oil GDP; Dutch Disease; Vector Error Correction Model.;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:29556. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.