Page 78 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE

complex partner (Gupta-Kapoor and Ramakrishnan, 1999). Below are

the graphical representations of Y az and Y eur changes over time. Values
for the Eurozone’s IPI have been reindexed, assigning 100 for January

2006 (first month in series):

Source: Central Bank of Azerbaijan statistical Source: EUROSTAT
database

The exchange rate in this study is the real bilateral exchange rate
of manat for Euro (AZN/EUR). It is said to be bilateral since it is Vis-à-

vis one partner. With such definition, an increase in the exchange rate’s
value represents a real depreciation of the currency, since more manats

can now be exchanged for the same amount of Euros. The exchange rate
has been accounted for inflation; it’s adjusted by the consumer price

index quotient. The numbers have been normalized by assigning 100 to

the January 2006 value (first month in series). Below is the graph of the
over time variation in the exchange rate:

Source: Central Bank of Azerbaijan statistical database

The numbers for exports and imports were taken from the Institute
for Fiscal Studies (IFS). Real GDP of Azerbaijan and the real bilateral

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