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The Effects of Oil Prices on Macroeconomic Variables: Evidence from Azerbaijan

Author

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  • Shahriyar Mukhtarov

    (Department of World Economy, Baku Engineering University, Baku AZ0101, Azerbaijan)

  • Sannur Aliyev

    (Department of International Economics, Azerbaijan State University of Economics (UNEC), Istiqlaliyyat Str. 6, Baku AZ1141, Azerbaijan,)

  • Javid Zeynalov

    (Department of Finance, Baku Engineering University, Baku AZ0101, Azerbaijan.)

Abstract

This study investigates the impact of oil prices on economic growth, export, inflation and exchange rate in Azerbaijan, employing Johansen cointegration and VECM methods to the data spanning from January, 2005 to January, 2019. The results from the Johansen cointegration method confirm the presence of a long-run relationship among the variables. Estimation results impulse-response and variance decomposition tests reveal that there is a positive and statistically significant impact of oil prices on economic growth, export and inflation for the Azerbaijani case. On the other hand, we find that oil prices have a negative impact on exchange rate. The results of this article will suggest to researchers and policy makers to comprehend the role of oil price shocks on economy in the case of Azerbaijan and other developing oil-rich countries.

Suggested Citation

  • Shahriyar Mukhtarov & Sannur Aliyev & Javid Zeynalov, 2020. "The Effects of Oil Prices on Macroeconomic Variables: Evidence from Azerbaijan," International Journal of Energy Economics and Policy, Econjournals, vol. 10(1), pages 72-80.
    • Handle: RePEc:eco:journ2:2020-01-11
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    18. Shangle, Ai & Solaymani, Saeed, 2020. "Responses of monetary policies to oil price changes in Malaysia," Energy, Elsevier, vol. 200(C).
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    20. Zulfigarov, Farid & Neuenkirch, Matthias, 2020. "The impact of oil price changes on selected macroeconomic indicators in Azerbaijan," Economic Systems, Elsevier, vol. 44(4).
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    More about this item

    Keywords

    Oil prices; economic growth; export; exchange rate; inflation; VECM; Azerbaijan;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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