Testing Purchasing Power Parity Hypothesis for Azerbaijan


Agazade S.

KHAZAR JOURNAL OF HUMANITIES AND SOCIAL SCIENCES, vol.18, no.3, pp.48-56, 2015 (Journal Indexed in ESCI) identifier

  • Publication Type: Article / Article
  • Volume: 18 Issue: 3
  • Publication Date: 2015
  • Doi Number: 10.5782/2223-2621.2015.18.3.48
  • Title of Journal : KHAZAR JOURNAL OF HUMANITIES AND SOCIAL SCIENCES
  • Page Numbers: pp.48-56

Abstract

This article examines the validity of purchasing power parity hypothesis for Azerbaijan. Econometric investigation uses linear and nonlinear unit root tests and are based on the time series characteristics of the real exchange rate of Azerbaijan's manat versus the national currencies of its major trading partners; USA, European Union, Russia and Turkey. Findings support the validity of the purchasing power parity hypothesis between Azerbaijan and its market economy dominated trading partners, but not support between Azerbaijan and its former centrally controlled partner.