TY - JOUR AU - Majidli, Famil AU - Guliyev, Hasraddin PY - 2020/08/10 Y2 - 2024/03/29 TI - How Oil Price and Exchange Rate Affect Non-oil GDP of the Oil-rich Country – Azerbaijan? JF - International Journal of Energy Economics and Policy JA - IJEEP VL - 10 IS - 5 SE - Articles DO - UR - https://www.econjournals.com/index.php/ijeep/article/view/9561 SP - 123-130 AB - <p>Identifying the economic factors that affect economic growth is an important issue for each economy. It is a matter of debate to determine the building blocks of non-oil GDP growth, especially in oil-rich countries, such as Azerbaijan. Using the Fully Modified Ordinary Smallest Square approach between 2005-2019, this study aims to investigate the relationship between real non-oil GDP growth of Azerbaijan and exchange rate and oil prices. Zivot-Andrews unit root test is applied to deal with structural breaks in data and the Gregory-Hansen test for robustness. While conventional unit-root tests decision that the series are not stationary at their level, the Ziwot-Andrews test decision that the series is stationary with structural break. According to the Gregory-Hansen test result, there is a structural break date in the long-run relationship between the real non-oil GDP growth and the oil price and the USD /AZN exchange rate in early 2009. According to FMOLS results, the increase in oil price increases real non-oil GDP growth, and the increase in USD / AZN exchange rate has a decreasing effect on it. This study contains considerable information for future economic policies for oil-rich countries that want to develop the non-oil sector.</p><p><strong>Keywords:</strong> oil price, non-oil GDP, exchange rate, fully modified ordinary smallest square approach, cointegration analysis, Azerbaijan</p><p><strong>JEL Classifications:</strong> C22, E32, E37, Q43</p><p>DOI: <a href="https://doi.org/10.32479/ijeep.9561">https://doi.org/10.32479/ijeep.9561</a></p> ER -