VALIDITY OF FISHER EFFECT IN AZERBAIJAN: TIME SERIES ANALYSIS-1994-2015

Abstract

Our globalizing world is increasing the importance of exchange rates. Increasing the prevalence of exchange rates has led to different approaches. The Fisher Effect (Hypothesis) is also the most famous of these approaches.The Fisher effect (Hypothesis) is an approach that reveals a positive relationship between inflation rate and nominal interest rates. In this regard, studies on the Azerbaijani example have not been done before, which demonstrates the importance of this issue. In the study, it was aimed to test the period of 1994-2015 using empirical data related to the Azerbaijani economy as an empirical test whether the Fisher effect is valid or not. In Azerbaijan, the research is divided into three parts in order to reflect the results more accurately, due to the hypothesis that in the year of 2006 the "denomination of manat" would be devalued in the research results because it was devaluation at the same time. Descriptive statistics in terms of numerical summarization of the obtained data, Correlation analysis to determine whether there is a relationship between these variables and to determine the direction and power of the relationship, To determine the relation between these variables and to make estimations and estimations about the subject by using this relation Regression analysis was applied. As a result of the analysis, it is found that the Fisher effect is not valid for the Azerbaijani economy or at any stage of the Azerbaijani economy (after hyperinflation, before or after the change of currency, before or after Devaluation).