Real Exchange Rate Misalignment in Azerbaijan
35 Pages Posted: 20 Mar 2011
Date Written: 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.
Keywords: Real Effective Exchange rate, Misalignment, Azerbaijani manat
JEL Classification: F31
Suggested Citation: Suggested Citation