THE IMPACT OF OIL PRICES ON MONETARY AGGREGATES IN AZERBAIJAN: ARDL AND COMBINED COINTEGRATION METHOD

Abstract

Each state is known for its main economic resource. This resource is one of the factors affecting all its economic indicators. Oil is the main economic resource in Azerbaijan. Undoubtedly, the volume of oil production and especially oil prices on the world market play the role of the main driving force of the economy. Thus, many macroeconomic indicators, economic development, economic growth, sustainability indicators, social welfare of the population, balance of payments, foreign trade are highly dependent on the oil factor. At this time, the banking sector is not an exception. In this study, the impact of the world price of oil on monetary aggregates, which act as certain indicators of the banking sector, has been evaluated. The study covers the period 2005M01‒2023M09. The overall result of the study was an emphasis on the importance of further deepening the measures taken to reduce the dependence of the monetary policy of the state and the banking sector on the oil factor in parallel with the further acceleration of work on the diversification of the economy and the development of the non‒oil sector.