Relationship between economic growth and income distribution: Azerbaijan case

In this study, the relationship between economic growth and income distribution in the Azerbaijan economy was examined. For the Azerbaijan economy, time series analysis was used by using the data for the period 1995-2021. According to the results of the Johansen cointegration analysis conducted in the study, a long-term significant relationship was found between the variables. Granger causality test was used to examine the causal relationship between the variables. According to the results obtained, a one-way causality relationship was determined from the Gini coefficient, which was used to measure the income distribution in the Azerbaijan economy, to economic growth and from unemployment to the Gini coefficient. In order to examine the interrelationships between economic growth and income distribution, impulse-response functions were examined and finally variance decomposition analysis was performed. According to the results obtained, income distribution is affected to a certain extent when the economic growth in the Azerbaijani economy increases steadily. For this reason, it is necessary to organize appropriate economic policies and implement these policies effectively in order to ensure a fair income distribution while achieving economic growth.