Rapid Credit Growth in Azerbaijan: Convergence or Boom? Macroeconomic Implications of Fast Credit Expansion

Master's Thesis , 2010 , 55 Pages , Grade: A-

Economics - Macro-economics, general

This thesis investigates a credit boom in Azerbaijan in 2008 year. I also employ VECM to my model to figure out long-run and short-run dynamics and equilibrium level of credit. This paper also studies macroeconomic implications of high credit expansion. The study shows that credit boom creates non-trivial risk for macro aggregates and is followed by financial crisis in the economy.

Inhaltsverzeichnis (Table of Contents)

• CHAPTER 1: INTRODUCTION.
• CHAPTER 2: RECENT ECONOMIC OVERVIEW IN AZERBAIJAN.
• CHAPTER 3: LITERATURE REVIEW
• CHAPTER 4: CREDIT BOOM..
  • 4.1 MAIN REASONS OF CREDIT BOOMS...
  • 4.2 EMPIRICAL INDENTIFICATION OF CREDIT BOOMS
• CHAPTER 5: DATA ANALYSIS AND THEORETICAL FRAMEWORK
  • 5.1 DATA ANALYSIS OF THE DETERMINANTS OF EQUILIBRIUM LEVEL OF CREDIT
  • 5.2 THEORETICAL FRAMEWORK.
• CHAPTER 6: EMPIRICAL ANALYSIS AND RESULTS.
  • 6.1 FINDING THE CREDIT BOOM LEVEL
  • 6.2 UNIT ROOT TESTS.
  • 6.3 COINTEGRATION TESTS
  • 6.4 VECTOR ERROR CORRECTION MODEL
  • 6.5 MODEL CHECKING
• CHAPTER 7: CONCLUSION AND DISCUSSION

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This thesis examines a credit boom in Azerbaijan in 2008, utilizing a Vector Error Correction Model (VECM) to analyze both long-run and short-run dynamics, and determine the equilibrium level of credit. The study investigates the macroeconomic implications of substantial credit expansion, highlighting the potential risks it poses to key economic indicators and exploring its connection to financial crises.

• Analyzing the causes and characteristics of a credit boom in Azerbaijan in 2008.
• Employing a VECM to understand the long-run and short-run dynamics of credit and its equilibrium level.
• Investigating the macroeconomic impact of significant credit growth on key economic aggregates.
• Assessing the potential for credit booms to contribute to financial crises.
• Contributing to a deeper understanding of credit booms and their implications in developing economies.

Zusammenfassung der Kapitel (Chapter Summaries)

Chapter 1 introduces the subject of the credit boom in Azerbaijan in 2008, setting the stage for the subsequent analysis. Chapter 2 provides an overview of the recent economic developments in Azerbaijan, contextualizing the credit boom within the broader economic landscape. Chapter 3 reviews relevant literature on credit booms and their impact on macroeconomic stability.

Chapter 4 delves into the phenomenon of credit booms, discussing their main causes and exploring methods for their empirical identification. Chapter 5 presents the data analysis conducted to determine the factors influencing the equilibrium level of credit, followed by a theoretical framework for understanding credit boom dynamics. Chapter 6 examines empirical results, focusing on identifying the credit boom level, conducting unit root and cointegration tests, developing a VECM, and validating the model.

Schlüsselwörter (Keywords)

Credit boom, Azerbaijan, macroeconomics, VECM, financial crisis, economic growth, credit expansion, equilibrium level, macroeconomic implications, data analysis, empirical analysis, unit root tests, cointegration tests, model checking.

• College: Central European University Budapest
• Grade: A-
• Author: Rashad Karimov (Author)
• Publication Year: 2010
• Pages: 55
• Catalog Number: V155027
• ISBN (eBook): 9783640678174
• ISBN (Book): 9783640678105
• Language: English
• Tags: Rapid, Credit, Growth, Azerbaijan, Convergence, Boom, Macroeconomic, Implications, Fast, Credit, Expansion