Page 130 - Azerbaijan State University of Economics

Yadulla Hasanli, Gunay Rahimli, Fuad Quliyev, Mattia Ferrari: Evaluation of Sectoral
Foreign Trade Elasticities of Azerbaijan

This elasticity of substitution also indicates that the elasticity between domestic and
imported products in the service sector is close to unity. In other words, a 1% change
in relative prices leads to an approximately proportional change in the ratio of
imported to domestic products.

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0
-35 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
actual values fitted values

Figure 3. Actual and fitted values of total demand in the service sector

Estimation of the parameters of the CET function
The estimation of the CET function parameters for the oil sector yielded the
following results:
Y = . 0 97 . 0 ( 92 E j . 0 14 + . 0 08 D j . 0 14 ) 9 . 6
j
2
R =0.99, DW=2.07

Figure 4 presents the actual and fitted values of total output in the oil sector, along
with the dynamics of the residuals.

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0
-25 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
actual values fitted values

Figure 4. Actual and fitted values of total output in the oil sector

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