The effectiveness of exchange rate channel in Azerbaijan: An empirical analysis

Creative Commons License

Mukhtarov S., YÜKSEL S., Ibadov E., Hamidov H.

Banks and Bank Systems, vol.14, no.1, pp.111-121, 2019 (Scopus) identifier

  • Publication Type: Article / Article
  • Volume: 14 Issue: 1
  • Publication Date: 2019
  • Doi Number: 10.21511/bbs.14(1).2019.10
  • Journal Name: Banks and Bank Systems
  • Journal Indexes: Scopus
  • Page Numbers: pp.111-121
  • Keywords: Azerbaijani economy, Exchange rate channel, Monetary transmission mechanism, VAR
  • Istanbul Medipol University Affiliated: Yes


The main purpose of this study is to make an analysis to understand whether the exchange rate channel is effective in Azerbaijan. In this framework, quarterly data between 2001:01 and 2017:02 is examined in this study. Furthermore, VAR method is taken into the consideration in the analysis process. The findings show that exchange rate channel is very important for Azerbaijani economy. In other words, the exchange rate channel is working on the total output and price axis. Hence, it is recommended that necessary actions should be taken by a central bank regarding the effective usage of exchange rate channel to contribute to industrial production and employment.