Real Exchange Rate Misalignment in Azerbaijan

35 Pages Posted: 14 Dec 2009 Last revised: 17 Jan 2010

Hasanov Javanshir Fakhri

Azerbaijan National Academy of Sciences, Institute of Cybernetics

Fariz Huseynov

North Dakota State University - College of Business

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

Fakhri, Hasanov Javanshir and Huseynov, Fariz, Real Exchange Rate Misalignment in Azerbaijan (November 20, 2009). Available at SSRN: https://ssrn.com/abstract=1522297 or http://dx.doi.org/10.2139/ssrn.1522297

Hasanov Javanshir Fakhri

Azerbaijan National Academy of Sciences, Institute of Cybernetics ( email )

9, F. Agayev Str.
Baku, Az1141
Azerbaijan
(+99412) 4301717 (Phone)
(+99412) 4300215 (Fax)

Fariz Huseynov (Contact Author)

North Dakota State University - College of Business ( email )

Department of Acctg, Finance & Information Systems
Fargo, ND 58108
United States
+17012315074 (Phone)

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