Budget deficit and macroeconomics fundamentals: The case of Azerbaijan

Artikel

In recent years, the emergence of rising budget deficit is the main reason forcing economists to investigate the reasons for changes in fiscal balances. The purpose of the paper is to investigate the relationship between budget deficit and macroeconomic fundamentals using data from Azerbaijan. The empirical analysis applies ARDL Cointegration methodology in conjunction with Granger causality tests to provide evidence for both the long and short run dynamics between the variables involved in the analysis. Using the Error Correction specification, there was found evidence of long-run causality running from current account, real interest rate, GDP, inflation and exchange rate to budget deficit. There was also found evidence of short-run Granger causal effects running from current account and real interest rate towards budget deficit and a rather weak causal effect from inflation to budget deficit. However, there is no short run causality running from interest rate to budget deficit.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: International Journal of Economic Sciences and Applied Research ; ISSN: 1791-3373 ; Volume: 4 ; Year: 2011 ; Issue: 2 ; Pages: 143-158 ; Kavala: Kavala Institute of Technology

Classification and Topics

• Classification: Wirtschaft ; Fiscal Policy ; National Deficit; Surplus ; Single Equation Models; Single Variables: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
• Subject: budget deficit ; fiscal policy ; cointegration methodology ; error correction model

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Farajova, Kahnim
• Event: Veröffentlichung
• (who): Kavala Institute of Technology
• (where): Kavala
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/66616
• Last update: 10.03.2025, 11:41 AM CET