Page 30 - Azerbaijan State University of Economics

Murad Y. Yusıfov: Econometrıc Assessment Of Optımal Interest Burden: Case Study For Azerbaıjan

MA(1) -0.424926
(-1.767698)

R-squared 0.664221
Adjusted R-squared 0.536305
Durbin-Watson stat 1.783698
* Note: t - statistics are shown in bracket.
The notes **, represent the stationarity significance. Test shows that, the
first differences of all logarithmic variables are stationary at the 1%, 5%
and 10% significance levels. While evaluating of the parameters of model,
it is defined that the errors follow the normal distribution.
Source: Estimation made via EViews software and summary table of results compiled
by the author.

In polynomial regression, if the first order derivative of the function ( ) at the point

0
which estimated by taking into account the lockdown factor becomes zero and the

0
second derivative is positive, then that point is its minimum point, and vice versa, that
point is its maximum point. The first order derivative of the function t( ) equals to

0
2
3614.99 − 121.09 + 1 = 0. If we find the roots of this quadratic equation, we

will get the values 1 = 0.0187 and 2 = 0.0148. We can find the second-order
derivative of the function t′′( ) = 7229.98 − 121.09 and determine the

extremum points. When we consider the values of the second order derivative at the
stationary (crisis) points we find, we determine that 1 = 0.0187 (1.87%) is the
minimum point, and 2 = 0.0148 (1.48%) is the maximum point. This means that
during the lockdown period, the interest burden maximizing the tax revenues was
1.48%, but minimizing point was 1.87%.

Let us now consider the assessment of polynomial regression for the non-lockdown
period. The first order derivative of the function t( ) equals to t′( ) =

0
2
2847.25 − 107.79 + 1 = 0. In order to find the critical points, we have to find

2
the roots of the quadratic equation 2847.25 − 107.79 + 1 = 0. By solving this

equation, subsequently we will get the values 1 = 0.0216 and 2 = 0.0163. We
can find the second-order derivative of the function t′′( ) = 7229.98 − 121.09

and determine the extremum points. When we consider the values of the second order
derivative at the stationary (crisis) points we find, we determine that 1 = 0.0216
(2.16%) is the minimum point, and 2 = 0.0163 (1.63%) is the maximum point. This
means that during the non-lockdown period, the interest burden maximizing the tax
revenues was 1.63%. Conversely, interest burden, which leads to the minimum level
of tax revenues during the non-lockdown period was found at 2.16%, but during the
lockdown period was 1.87%.

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