The “Dutch disease” in Caspian region : the case of Azerbaijan republic

Abstract EN

The main purpose of this paper is to analyze the “Dutch Disease” syndrome in Azerbaijan Republic, as well as to offer an alternative way of demonstrating the stability of the equilibrium of the External and Internal balances.

By analyzing the monetary sector via implementing the extended version of the BalassaSamuelson model we show that there is no vulnerability to the “Dutch Disease” syndrome in Azerbaijan from a monetary perspective, although some potential dangers for the future health of the economy do exist.

Policy suggestions and recommendations were made to avoid any negative impact of the booming oil sector on the small-open transition economy.