Why Had the Money Market Approach Been Irrelevant in Explaining Inflation in Azerbaijan During the Rapid Economic Growth Period?

Journal of Middle Eastern Finance and Economics, No. 10, 2011

10 Pages Posted: 16 Mar 2011

See all articles by Hasanov Fakhri

Hasanov Fakhri

Qafqaz University - Center for Socio-Economic Research; George Washington University - Research Program on Forecasting; Institute of Cybernetics - Department of Modeling Socio-Economic Processes

Khudayar Hasanli

affiliation not provided to SSRN

Date Written: February 1, 2011

Abstract

The study examines whether inflation process can be explained within the framework of the Money Market Approach in the third stage of economic development of Azerbaijan economy covering 2004-2008. By employing dynamic modeling study concludes that the Money Market Approach has not been relevant for explaining Azerbaijani inflation. Because Azerbaijan, a resource rich small open economy in transition processes, has some stylized facts which are important to take into account in the analysis of the inflation. Since the Money Market Approach seems irrelevant one, the paper puts forward application of other alternative explanations for Azerbaijani inflation in the future. In this regard analyzing inflation in the context of resource dependence seems one of the relevant approaches due to high price increases mainly sourced from oil revenues.

Keywords: Inflation rate, Money Market Approach, Transition economy, Resource Abundance, Oil and Non-oil Sectors, Econometric modeling, Azerbaijan

JEL Classification: P24, Q33, C22

Suggested Citation

Hasanov, Fakhri and Hasanli, Khudayar, Why Had the Money Market Approach Been Irrelevant in Explaining Inflation in Azerbaijan During the Rapid Economic Growth Period? (February 1, 2011). Journal of Middle Eastern Finance and Economics, No. 10, 2011 , Available at SSRN: https://ssrn.com/abstract=1784282

Fakhri Hasanov (Contact Author)

Qafqaz University - Center for Socio-Economic Research ( email )

Baku Sumgait Road 16th km.
Hasan Aliyev Str. 120
Khirdalan, Baku AZ0101
Azerbaijan
+994 (12) 4482862-66 (Phone)
+994 (12) 4482861,67 (Fax)

HOME PAGE: http://www.qu.edu.az/

George Washington University - Research Program on Forecasting ( email )

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Old Main, Suite 208
Washington, DC 20052
United States
(202) 994-6150 (Phone)
(202) 994-6147 (Fax)

HOME PAGE: http://research.columbian.gwu.edu/cer/research/forecasting

Institute of Cybernetics - Department of Modeling Socio-Economic Processes ( email )

9, F. Agayev Str.
Baku, Az1141
Azerbaijan
(994 12) 5390151 (Phone)
(994 12) 5392633 (Fax)

HOME PAGE: http://www.cyber.az/

Khudayar Hasanli

affiliation not provided to SSRN ( email )

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