Why had the Money Market Approach been irrelevant in explaining inflation in Azerbaijan during the rapid economic growth period?
AbstractThe study examines whether inflation process can be explained within the framework of the Money Market Approach in the third stage of economic development of Azerbaijan economy covering 2004-2008. By employing dynamic modeling study concludes that the Money Market Approach has not been relevant for explaining Azerbaijani inflation. Because Azerbaijan, a resource rich small open economy in transition processes, has some stylized facts which are important to take into account in the analysis of the inflation. Since the Money Market Approach seems irrelevant one, the paper puts forward application of other alternative explanations for Azerbaijani inflation in the future. In this regard analyzing inflation in the context of resource dependence seems one of the relevant approaches due to high price increases mainly sourced from oil revenues.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 29559.
Date of creation: Feb 2011
Date of revision:
Inflation rate; Money Market Approach; Transition economy; Resource Abundance; Oil and Non-oil Sectors; Econometric modeling; Azerbaijan;
Find related papers by JEL classification:
- P24 - Economic Systems - - Socialist Systems and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation
- Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-26 (All new papers)
- NEP-CWA-2011-03-26 (Central & Western Asia)
- NEP-MON-2011-03-26 (Monetary Economics)
- NEP-TRA-2011-03-26 (Transition Economics)
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