Download This PaperReal Exchange Rate Misalignment in Azerbaijan
35 Pages Posted: 14 Dec 2009 Last revised: 17 Jan 2010
Date Written: November 20, 2009
Abstract
By using quarterly data from 2001-2007 and applying various approaches, we estimate real equilibrium exchange rate misalignment for Azerbaijani Manat (AZN) and find that AZN is slightly overvalued. Purchasing power parity approach does not explain the equilibrium exchange rate. However using behavioral and permanent equilibrium exchange rate approaches, we find that the relative productivity, terms of trade, trade openness, net foreign assets, government expenditures and oil prices are the main determinants of misalignment.
Keywords: Real exchange rate, misalignment, Azerbaijan, Manat, exchange rate
JEL Classification: F31
Suggested Citation: Suggested Citation
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