Analysis of cotton production and price relationship by Koyck model: a case study for Azerbaijan

Abstract

Objective: The objective of this study was to examine the production quantity-price relationship in cotton production in Azerbaijan with the data of the period 1995-2022. Materials and Methods: In this study, the data obtained from FAOSTAT and the State Statistics Committee of the Republic of Azerbaijan were analyzed. Koyck model was used to analyze the relationship between cotton production and price in Azerbaijan. Results: It was determined that the time required for the change in cotton prices to cause a significant and perceptible effect on cotton production is 2,86 years according to the average number of lags. A one-unit increase in cotton prices increases production by 2,524 tons, while a one-unit change in prices in the previous period increases cotton production by 1,870 tons. Conclusion: In order to sustain and increase cotton production in Azerbaijan and to create international competition opportunities, it is necessary to closely follow the developments in the production of this product and develop alternative strategies and policies.