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THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.80, # 2, 2023, pp. 47-59
Error Correction Form results are presented below:
Table 6: Model 1 - short-run estimate results
Table 5
Variable Model 1
Dependent variable: Real GDP growth
-2.22***
−1 (-13.37)
0.66***
ΔRGDPG −1 (5.47)
0.28***
ΔRGDPG −2 (4.15)
-0.08
ΔLRGOVREV
(-1.45)
0.28***
ΔOILPRCG
(3.96)
-0.15*
ΔOILPRCG −1 (-1.85)
R-squared 0.89
Adjusted R-squared 0.88
Observations 69
Notes: Numbers in brackets represent t-Statistics.
Source: Compiled by author based on Eviews calculations
According to the Model 1 long-run estimation results (Table 5, Panel A), a 1%
increase in government tax revenue results in a 0.16% decrease in real non-oil GDP
growth and a 0.10% decrease in real total GDP growth in the long run. This result is
in line with the results of Blanchard and Perotti (2002), Arnold et al. (2011), and
Aliyev and Nadirov (2016). Long-term estimation results also indicate that there is a
statistically significant positive link between capital investments and economic
growth (both total and non-oil economy) in Azerbaijan.
The total trade variable is also found to have a statistically significant positive link
with real GDP growth, including and excluding the oil sector. Oil price change is
found to have a statistically significant impact on both real non-oil GDP growth and
real total GDP growth. The statistically significant positive relationship between oil
prices and non-oil economic growth in Azerbaijan is in line with Aliyev and Nadirov
(2016) results.
The short-term estimation results (Tables 6 and 7) also offer interesting results.
Government tax revenue does not seem to significantly impact (there is a weak
negative relationship) real total GDP growth in the short term, but there is a
statistically significant negative relationship between government tax revenue and real
non-oil GDP growth.
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