Modelling the Impact of Fiscal Policy on Non‑Oil GDP in a Resource Rich Country: Evidence from Azerbaijan

Aliyev, K., Dehning, B., & Nadirov, O. (2016). Modelling the Impact of Fiscal Policy on Non‑Oil GDP in a Resource Rich Country: Evidence from Azerbaijan. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 64(6), 1869-1878.

10 Pages Posted: 30 Jul 2020

See all articles by Khatai Aliyev

Khatai Aliyev

Azerbaijan State University of Economics (UNEC); Baku Engineering University

Bruce Dehning

Chapman University - The George L. Argyros School of Business & Economics

Date Written: 2016

Abstract

This paper analyses the impact of public expenditures and tax revenues on non‑oil economic growth in Azerbaijan for the period of 2000Q1‑2015Q2 by employing OLS, ARDL, FMOLS, DOLS, CCR and Granger Causality techniques. Different cointegration methods result in consistent results. In this study, there is strong evidence of significant long‑run positive contributions from public expenditures to non‑oil sector output. Results also show that tax revenues significantly slow down non‑oil economic growth in the long run. Granger Causality analysis finds the existence of a bidirectional short‑run association between non‑oil GDP and public expenditures, while tax revenues Granger Cause both variables. The research findings should be useful for Azerbaijan fiscal policy makers to consider now and in the future. Current plans in Azerbaijan for both public expenditure cuts and tax revenue increases are likely to cause contraction in the Azerbaijan’s non‑oil sector GDP.

Keywords: Non‑oil GDP; public expenditures; tax revenues; fiscal contraction; Azerbaijan

JEL Classification: H30; H50; H53; H60; H70

Suggested Citation

Aliyev, Khatai and Dehning, Bruce, Modelling the Impact of Fiscal Policy on Non‑Oil GDP in a Resource Rich Country: Evidence from Azerbaijan (2016). Aliyev, K., Dehning, B., & Nadirov, O. (2016). Modelling the Impact of Fiscal Policy on Non‑Oil GDP in a Resource Rich Country: Evidence from Azerbaijan. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 64(6), 1869-1878., Available at SSRN: https://ssrn.com/abstract=3643331

Khatai Aliyev (Contact Author)

Azerbaijan State University of Economics (UNEC) ( email )

Istiglaliyyat street 6
Baku, AZ Az1001
Azerbaijan

Baku Engineering University ( email )

Hasan Aliyev str. 120
Khirdalan, Baku AZ 0101
Azerbaijan

Bruce Dehning

Chapman University - The George L. Argyros School of Business & Economics ( email )

333 N. Glassell
Orange, CA 92866
United States

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