Econometric Valuation of the Relationship between Inflation and Exchange Rate in Azerbaijan Republic
The paper proposes econometric model of the relationship between inflation and exchange rate in Azerbaijan. The model is based on monthly figures for the last 8 years. In the constructed model the author used 12-month changes of the indicators obtained by the explanatory variable for the purpose of deviation from the seasonal problems. The broad money supply and the price of oil in the world market were included in the model as an explanatory variable. The mechanism of the effect of these changes on inflation was shown in graphs.