The impact of tourism income on the macroeconomic indicators of Azerbaijan; Analysis of the 1995-2016 period

Tourism, as a service sector, has shown a rapid growth throughout the world. Tourism is the second-fastest growing sector in the world. The contribution of the tourism sector to the eonomy can not be calculated precisely because it is associated with many large and small sectors in the economy. However, it is understood from the theorical and empirical studies done in the literature that, tourism has a positive effect on macroeconomic indicators. Tourism is an important sector in tems of being sector which provides the biggest foreign currency in flow and creates employement for the economies of the country. Furthermore, with its contributions to the foreign payment balance, income level and regional development countries are trying to increase their portion of tourism revenues. Aim of this case to measure impact and relationship of tourism revenues on macroeconomic factors of Azerbaijan between 1995-2017 years. Scope of topic, database have been obtained from Azerbaijan Statistics Committee, Central Bank of Azerbaijan Republic' annual reports and this data have been subjected to econometric analysis. The hypothesis, tourism revenues effects positively of Azerbaijan economy was analyzed Philip Peron unit root, ARDL model, Var analysis, impulse-response and variance decomposition functions, respectively. It has been concluded that tourism revenues have an inverse and weak relationship with inflation and unemployment rate, and with a positive and strong relationship with GDP and budget revenues, while the increasing effect on the GDP variable tends to increase in the long term.It was accepted that tourism incomes affected to main economic indicators of country, and this sector play a crucial role of increasing non-petrol revenues. Keywords: Economy of Azerbaijan, sector of tourism, VAR analysis, macroeconomic factors.