Real Exchange Rate Misalignment in Azerbaijan
Hasanov Javanshir Fakhri
Azerbaijan National Academy of Sciences, Institute of Cybernetics
North Dakota State University - College of Business
November 20, 2009
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.
Number of Pages in PDF File: 35
Keywords: Real exchange rate, misalignment, Azerbaijan, Manat, exchange rate
JEL Classification: F31
Date posted: December 14, 2009 ; Last revised: January 17, 2010
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