Model of Correction of Errors of the Current Account of the Balance of Payments of Azerbaijan, Taking Into Account Macroeconomic Indicators and World Oil Prices
https://doi.org/10.26794/2587-5671-2026-30-5-1389-03
Abstract
The purpose of the study is to determine the impact of GDP, investment, the national currency rate, the state budget deficit, indicators of the foreign trade sector, the level of foreign exchange reserves, and world prices for Brent and West oil on the dynamics of the current account of Azerbaijan’s balance of payments. An econometric analysis of the interdependence of the indicators of the current account of the balance of payments with the listed macroeconomic indicators and the residuals of the model was carried out to form an error correction model. The paper applies and summarizes the latest methodological developments in the direction of modern econometrics research. As a result, the degree of dependence of endogenous and exogenous factors was revealed, as well as the short-term and long-term relationship between dependent and independent factors. To check the stability of the AR model, the Roots of Characteristic Polynomial test was applied, and the inverse roots of the characteristic equation of the polynomial from the shift operator were calculated. An error correction model has been created, which makes it possible to conduct an economic and statistical analysis of the dynamics of the current account of the balance of payments and on the basis of which it is possible to give a forecast assessment for the future period.
Keywords
balance of payment,
macro indicators,
oil prices on world markets,
stationarity,
an error correction model,
responses of impulse functions
JEL: C1, C12, C51
About the Author
N. S. Ayyubova
Baku State University
Azerbaijan
Competing Interests:
Azerbaijan
Natavan S. Ayyubova — Cand. Sci. (Econ.), Assoc. Prof., Department of Mathematical Economics
Baku
Competing Interests:
The author has no conflicts of interest to declare.
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Ayyubova N.S. Model of Correction of Errors of the Current Account of the Balance of Payments of Azerbaijan, Taking Into Account Macroeconomic Indicators and World Oil Prices. Finance: Theory and Practice. https://doi.org/10.26794/2587-5671-2026-30-5-1389-03
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