Showing 41 results for Exchange Rate
Volume 0, Issue 0 (1-2024)
Abstract
This study investigates the factors affecting coffee exports in Cameroon. For this purpose, we employed the gravity model. Considering the sample characteristics, the model is estimated with the Poisson pseudo-maximum likelihood (PPML) method. The main material of the study is a panel data set covering the years 2001-2021 for ten countries, Cameroon’s main coffee export partners. The findings show that the GDP of importing countries, coffee export prices, and bilateral investment treaties (BITs) positively influence exports, whereas distance, exchange rates, and Cameroon’s GDP have negative impacts. The results highlight Cameroon’s logistics infrastructure deficiencies and the significance of stable, high-quality production. The Cameroonian government should implement policies to improve production quality and efficiency by expanding agricultural extension services and offering farmers input and investment incentives to address these challenges. Additionally, improving port efficiency will necessitate the digitalization of operations, implementation of data-driven planning, and strategic infrastructure investments.
Dr Soheil Roudari, Dr Hamidreza Maghsoudi, Dr Farzaneh Ahmadian-Yazdi,
Volume 0, Issue 0 (12-2024)
Abstract
Aim and Introduction
One of the most important issues in Iran's economy is related to managing the exchange rate, inflation and budget deficit. During tightening of the sanctions, the oil revenues are limited which potentially leads to an increase in the budget deficit as well as a decrease in the currency supply which accelerates the exchange rate. On the other hand, with the increase in the budget deficit, the probability of borrowing from the banking system and also the issuance of bonds increases, which in turn rise the monetary base and liquidity. In addition, inflationary expectations also increase, which can be effective in improving assets prices. With an increase in inflation, based on the inflation-currency spiral, there is a possibility of a grow in exchange rate in order to maintain the competitiveness of domestic production. This can accelerate the price of imported commodities and cause domestic inflation again. With the increase in inflation and households spending, nominal wages will have a higher growth compared to normal conditions in order to maintain minimum purchasing power, which can again face the government with limited resources and more borrowing to meet current expenses. From the monetarists’ point of view and the classical economics, in general, the main stimulator in increasing inflation is the growth of money and liquidity. However, from the post-Keynesian economists’ point of view, inflation increases the demand of money and subsequently liquidity. On the other hand, with an increase in the exchange rate, the government's expenses usually increase more than its income, which can lead to an increase in the government's budget deficit. Also, considering the existence of a monopoly in currency supply by the central bank, the hypothesis of using currency exchange revenues (the difference between free and budget-approved currency) will be applicable and this issue can raise the impact of the budget deficit on the exchange rate. Therefore, there has always been a serious challenge among economists as well as macroeconomic decision-makers about the connectedness between macroeconomic variables. What is the main driver of the network between macro variables? Is there a different way of communication in different thresholds of their growth rate? These cases show that it is very important to examine the time-varying interrelationships between these macroeconomic variables.
Accordingly, there is a complex connection between exchange rate, inflation, budget deficit and liquidity, which can be varied in different years. Therefore, in this research, using the TVP-TVAR technique, the time-varying connectedness across exchange rate, inflation, budget deficit and liquidity is examined during March, 2006 to August, 2023.
Methodology
In the current research, the relationship between exchange rate fluctuations, inflation, government budget deficit and liquidity based on monthly data using the TVP-TVAR technique is investigated. It should be noted that all the required information is extracted from the economic indicators of the central bank, and the government's budget deficit data from 2017 onward are extracted from Iran's Program and Budget Organization.
Findings
The results show that exchange rate and liquidity are, respectively, the largest net transmitter of volatilities in the network. Moreover, inflation rate and government budget deficit, respectively, are the largest net receivers of shocks from network. On average, the TCI is 23%, and more than 70% of this interrelationship between variables is explained by other factors such as political ones. Moreover, if the variables underestimated grow up to 36% annually (3% monthly), the connection between them will be cut off. In the conditions of decreasing the growth rate of variables up to -3% per month, the exchange rate has played a dominant role and its volatilities are transferred more strongly to inflation rate and less strongly to the budget deficit and liquidity.
If the growth rate of the variables is up to 24% annually (threshold of +2% monthly growth rate), the exchange rate volatilities are transferred to inflation and no interconnectedness between other variables is observed.
Discussion and Conclusion
Our results show that, on average, the total connectedness index from 2012 to 2016 has been upward, which is caused by the tightening of sanctions and the increase in inflationary expectations, psychological factors and emotions. Moreover, the connectedness between them is increased in 2018 and 2019, which is related to the intensification of sanctions and the reduction of currency supply and the increase in inflation and budget deficit and subsequently the increase in the issuance of debt securities in the capital market in order to manage the budget deficit and as a result increase liquidity. The results show that exchange rate is a main net transmitter of volatilities in most years and the inflation rate is a main net receiver of volatilities in many years. From 2016 onwards, the budget deficit is the net receiver of shocks from network in most periods, except for one period in 2019. It is interesting to note that in 2019, with the increase in the budget deficit and the issuance of debt securities, the budget deficit is transmitter, liquidity is receiver and inflation is more receiver variable than liquidity in the network. Totally, the results show that exchange rate is the major net transmitter of shocks to other macro variables.
Moreover, based on the results of the sensitivity analysis and thresholds effect, if the growth rate of variables is up to 24% annually (threshold of +2% monthly growth rate), the exchange rate fluctuations will be transferred to inflation and no connection between other components is observed. This shows that the macroeconomic management of the economy is very sensitive to the growth rate of the thresholds of the macroeconomic components, and before the political economy and also the factors of expectations and emotions dominated the economy, the macroeconomic management, especially the exchange rate, is required. Otherwise, it is impossible to manage the investigated variables with monetary and fiscal policies. Therefore, the managed floating exchange rate should be taken into consideration and if the goal is to manage the network using macroeconomic theories, the variables should not be allowed to increase by more than 24% annual growth. Other factors such as the political economy, and especially inflationary expectations will get the dominant role in the economy
Dr Farideh Khodadadi, Dr Hossein Samsami,
Volume 0, Issue 0 (12-2024)
Abstract
Aim and Introduction
The financial sector has seen considerable growth in many post World War II western economies. The consequences of the Great Financial Crisis of 2007-2009 displayed how large the reach of the industry is, and how actions taken by a few important role players, can harm the general public. It is due to the consequences of the Great Financial Crisis that the notion of reforming the banking sector came about. The call for reform occurred in the 1940s as well, after the Great Crash. It was here that Full Reserve Banking (FRB), the broad term for the proposed banking reform and the subject of this dissertation, originated.
The Great Crash ended a period of expansion and growth in the USA in the 1920s where credit was easily available, and the money supply grew. The subsequent Great Depression was an economic event of unprecedented dimensions (Temin, 2000). The years 1929-1933 held a stock market crash, a banking crisis, and a collapse of commodity prices. Friedman and Schwartz (1963) contended that the primary propagation mechanism of the Depression was the contraction in the US money supply, together with banking panics. There were three banking crises in that short period, and it was the failure of two large banks, the Bank of United States and Caldwell and Company, that caused most of the problem. These banks had undergone rapid credit expansion in the 1920s and collapsed under the pressure of the recession (Temin, 2000: 307). A response to the recession was to say that the root cause was bad banking practice and that stricter regulations should be imposed to prevent future crises. Regulation was introduced in The Glass-Steagall Act (1933) however, a more severe suggestion was that bank deposits should be fully backed by bank reserves, Full Reserve Banking, an approach proposed in the Chicago Plan.
The Chicago Plan was proposed by Henry Simons, Irving Fisher and others, to prevent another crisis. It proposed requiring banks to hold 100 per cent reserves. This would simultaneously curb the possibility of reckless lending, and eliminate the risk of bank runs, thereby eliminating the possibility of another banking crisis.
Over the past years, the nominal capacity of the supply of bank facilities has increased significantly, and the main increase in bank assets has come from the increase in granting facilities. On the liabilities side of the banks' balance sheets, non-governmental sector deposits (due to paying high interest rates to depositors) during the year 2013 to 2022 has increased by 33.6% on average.
Statistical evidence shows that the real sector of the economy has not benefited much from the expansion of the banking network's balance sheet and the allocation of bank resources has not led to economic growth. On the other hand, it can be seen that the liquidity created by the banking system has not been absorbed by the real sector of the economy and its effects have been manifested in nominal variables in the form of price increases or turbulences in the currency market and other assets. The average growth of real GDP (without oil) during the years 2013 to 2022 was about 1.6 percent.
In general, it can be seen that due to the endogenous nature of money, the central bank has not had a significant success in controlling the growth of monetary aggregates through controlling the growth of the monetary base and its components (statistical evidence in recent decades confirms this); So that the credibility of the central bank's monetary policies has been challenged and the economy has been exposed to continuous threats of inflation and monetary and financial instabilities.
Methodology
This study will employ several techniques for gathering data, including a library type, a documentary branch, and the use of databases, such as those of the Central Bank of the Islamic Republic of Iran and the World Bank. Based on the characteristics of the Iranian economy under fractional & full reserve banking, a random dynamic general equilibrium model was developed for the period 1991-2021. Typical econometric methods are also used to evaluate the hypotheses. This has enabled assessing the effects of the exchange rate shock under two scenarios. It should be noted that the models were estimated in the dynare program space under MATLAB software.
Findings
The exchange rate shock has a negative effect on the consumption of the private sector at real prices, probably due to an increase in import prices. This has led to a decrease in the import of goods. Since imports form a part of the consumption for the private sector, therefore, the consumption by this sector decreases by about 0.5 percent. The Exchange rate shock has had a positive effect on the net foreign exchange reserves of the central bank. The growth rate of the monetary base is also affected by the currency shocks. With the increase in the exchange rate, although the central bank first reacts to the inflationary conditions resulting from the currency shocks through the currency reaction function and reduces the base monetary growth rate, but this situation is not very durable and finally the monetary base growth rate will increase by about 0.4 percent.
If these resources enter the banking system, due to the 100 percent reserve, it has led to the crediting of the banks, and as a result, inflation and final costs have decreased. But in fractional reserve banking, banks create money by attracting deposits, which in turn creates money by them. As a result of this jump, inflation and the final cost will increase.
The exchange rate shock also increases inflation because with the increase in the nominal growth rate of the exchange rate, the marginal cost of each import unit increases and finally the country's inflation increases by 0.7 percent.
Discussion and Conclusion
The purpose of this research is to investigate the effects of exchange rate impulse on the macroeconomic variables of Iran's economy in the conditions of partial and full reserve banking. To achieve this goal, a new Keynesian stochastic dynamic general equilibrium model was designed considering fractional and full reserve banking system (FRB). The realities of the Iranian economy are considered, and then the effects of exchange rate shocks under two types of banking are investigated. After determining the input values of the model and estimating the parameters using the seasonal data of Iran's economy during the period of 1991-2022 using the Bayesian estimation method, the results obtained from the simulation of the model variables indicate the validity of the model in describing the fluctuations of the Iranian economy. The results of the model indicate that, as a result of the exchange rate shock, the growth rate of the monetary base and consequently the amount of money is affected. Under full reserve banking, due to the full reserve of deposits, this has led to a lower increase in inflation and final cost. However, in partial reserve banking, due to the less control of the banking system, despite having two tools to control the growth of the monetary base and the nominal exchange rate, it will create higher fluctuations in the inflation rate and other macroeconomic variables. In other words, the study model has been slightly different from the basic model in the face of the currency impulse, both in terms of the amplitude and the length of the fluctuation
Kiumars Aghaei, Amir Jabbari, Mohammad Karimi,
Volume 8, Issue 2 (7-2008)
Abstract
Recent discussions on macroeconomic policy in developing and developed countries have emphasized the crucial role played by the real exchange rate in the adjustment process. There is a growing agreement that sustained real exchange rate misalignment will usually generate severe macroeconomic disequilibria through affecting macroeconomic variables.
This study aims to investigate the sources of macroeconomic variable fluctuations in Iran focusing on real exchange rate. We implement the model with a structural VAR model and variance decomposition technique using annual macroeconomic time series data of the Iranian economy from 1970 to 2005.
The findings suggest that real exchange rate fluctuations in Iran are mostly explained by monetary shocks as well as oil price shocks. Moreover, the results show that major part of income fluctuations in Iran are due to the price shocks, oil price shocks, money shocks, and supply shocks.
This paper recommends that diversifying the economy, developing infrastructure, stabilizing prices, increasing investment, reducing money fluctuations, and controlling money supply may well then contribute to improve growth performance in the economy. According to our results, money disturbances and oil prices effect significantly real exchange rate fluctuations. So, this paper suggests that conducting monetary policy requires a greater caution to stabilize the economy.
Mehdi Khashei, Mehdi Bijari,
Volume 8, Issue 2 (7-2008)
Abstract
The evolution of financial data shows a high degree of volatility of the series, coupled with increasing difficulties of forecasting financial variables. Some alternative forecasting methods, based on the literature review, have been developed, which can be particularly useful in the analysis of financial time series. Despite of the numerous time series forecasting models, the accuracy of time series forecasting is fundamental to many decision processes. Selecting an efficient technique in unique situations is very difficult task for forecasters. Many researchers have integrated linear and nonlinear methods in order to yield more accurate results.
In practice, it is difficult to determine the time series under study are generated from a linear or nonlinear underlying process while many aspects of economic behavior may not be pure linear or nonlinear. Although both ARIMA and Artificial Neural Networks (ANNs) models have the flexibility in modeling a variety of problems, none of which is universally the best model used indiscriminately in every forecasting situation.
In this paper, based on the foundations of ARIMA and ANNs models, a hybrid method is proposed to forecast exchange rate. Empirical results indicate that integrating linear and nonlinear ARIMA and Artificial Neural Networks (ANNs) models can be an effective way to improve forecasting accuracy achieved by either of the above linear and nonlinear models used separately.
Ayat Karami, Mansour Zibaei,
Volume 8, Issue 3 (10-2008)
Abstract
Since Iran is one of the most important countries in producing as well as exporting pistachio and dates Therefore, in this study after calculating exchange rate volatility using the criterion of standard deviation of exchange rate moving average, the effects of this volatility on the export supply of mentioned crops was investigated. Autoregressive distributed lag model, one of the co-integration analysis methods, was used to reach the aim. Export supply function of pistachio to German, Unit Kingdom and Italy and export supply of dates to German, Unit Kingdom and Turkey were estimated. The results indicated that exchange rate volatility has different effects on export of the crops to understudy countries. Therefore in relation to trade policies, the effect of exchange rate volatility on trade should be considered with respect to destined country.
, Majid Aghaei, Mohammad Rezaeepour,
Volume 9, Issue 1 (4-2009)
Abstract
Exchange rate and inflation rate consistently affect stock price and the return on stocks. Since such effects could impact income distribution, it is important to study such issue carefully. In this paper an attempt is made to study the impact of exchange rate and inflation rate on the real returns as well as the stock price index in Tehran stock market.
In this paper, we use a vector autoregreesion (VAR) model as well a vector error correction model (VECM) to examine the relationship among variables. This study uses monthly data from 1983M4 through 2007M3. The results indicate that there exists a stable long–run relationship among the variables included in the model. Exchange rate and inflation rate positively affect the real rate of stock return. However, the impact of inflation rate is stronger than the impact of the exchange rate.
Bahram Sahabi, Hussein Sadeqi, Ali Akbar Shurehkandi,
Volume 11, Issue 1 (5-2011)
Abstract
This paper investigates the impact of exchange rate on non-oil export covering the period from 1978 to 2006. The method used in this study is Panel data, and these countries are selected as the hosts: Turkey, The United Arab Emirates, Saudi Arabia, Kuwait and Pakistan. In this research, Gross Domestic Product of the host country, Bilateral Exchange Rate, Price Raito and Dummy Variable are used as regressor for non-oil exports. The result of this study shows that, gross domestic product and exchange rate have positive effect, but price ratio and dummy variable have negative effect on non-oil exports of Iran to these countries. Also Cross Section Specific coefficient shows that exchange rate has positive effect on export to Turkey, The UAE and Pakistan, while negative effect on other countries.
Kazem Yavari, Mahdieh Rezagholizadeh, Majid Aghaei,
Volume 11, Issue 2 (8-2011)
Abstract
This article analyses the effects of foreign exchange commitment and exchange rate unification policies on Iran’s non-oil exports during the last three decades. In addition, the effects of these policies on non-oil exports have empirically been estimated. For this purpose, an export supply model was estimated using the econometrics technique of Auto Regressive Distributed Lag (ARDL) and reliable Iranian data for the last three decades.
The empirical results of this paper shows that during the entire period of 1977-2008, foreign exchange commitment policy has caused non-oil exports to decline, but exchange rate unification policy has had positive effects on Iran’s non-oil exports.
Hossein Asgharpour, Sakineh Sojoodi, Nasim Mahin Aslani Nia,
Volume 11, Issue 3 (10-2011)
Abstract
According to exchange rate pass-through models, exchange rate has a great impact on the competitiveness of exports and determining the effects of exchange rate on export prices can be useful in planning for export promotion. For this purpose, in this paper it has been attempted in the theoretical framework of exchange rate pass- through models and applying ARDL approach the effects of exchange rate on non- oil exports price of Iran during 1971 to 2007 has been tested empirically. The findings show that there is a significant positive relationship between exchange rate and export price index so that by increasing exchange rate (devaluation of national currency) export price index increases significantly. Exchange rate pass- through to export prices is complete and to import prices in terms of destination currency is zero. In other words, the empirical results of this study indicate that in the Iranian economy, exporters are faced with devaluation of national currency (increase in exchange rate), which increases export prices in terms of domestic currency. Thus, the exchange rate changes have not significant effects on export prices in terms of destination currency and just affect the profits of exporters.
Shahram Fattahi, Minoo Nazifi,
Volume 14, Issue 2 (5-2014)
Abstract
This study tries to model real exchange rate using a two-state Markov autoregressive model. The empirical results indicate that the real exchange rate cycles are well explained by a switching autoregressive pattern rather than a simple autoregressive model. The Markov switching autoregressive model (MSAR) is a non-linear method, which models volatility in financial markets well and identifies periods of regime change of exchange rate volatility. The results show that duration of staying in high volatility regime (regime 1) is less than that of low volatility regime (regime 2) in Iran. The other result is the possibility of testing for the purchasing power parity (PPP) theory, implying that existence a regular trend in data and lack of convergence potential real exchange rate to 1 leads to reject the PPP theory. Since there is a regular trend in real exchange rate data, we can reject the PPP theory in Iran. This also indicates that the real variables affect real exchange rate only in the long-run.
Jaafar Haqiqat, Ebrahim Javdan,
Volume 14, Issue 4 (1-2015)
Abstract
Since the breakdown of the Bretton Woods system of fixed exchange rates, both real and nominal exchange rates have fluctuated widely. Empirical findings indicate significant impact of exchange rate uncertainty on macroeconomic variables such as output, trade, and investment. This article investigates the impact of the real exchange rate uncertainty on total factor productivity (TFP) in agriculture sector of Iran during the period of 1974-2007. The uncertainty of real exchange rate is defined as the conditional variances obtained from Exponential Generalized Auto-Regressive Conditional Heteroscedasticity (EGARCH) model. The econometric estimation using Auto-Regressive Distributed Lag (ARDL) approach shows that the real exchange rate uncertainty has a significant and negative effect on TFP in Iran's agriculture sector in long- and short term. According to the results, in order to reduce the real exchange rate uncertainty, it is recommended that the appropriate policies should be made by policymakers to lessen the difference between nominal and real exchange rates.
Seyyed Safdar Hosseini, Maryam Shokoohi,
Volume 15, Issue 1 (4-2015)
Abstract
Inflation is the main problem which should be overcome both by the government and economic agents. The existence of inflation in an economy causes distortion and disequilibrium in the macroeconomic variables in the forms of decreasing growth rate, rising unemployment rate and uneven income distribution and so on. In addition, the uncertainties caused by the high inflation rates, raise the inflation expectations. This paper tries to found out which type of inflation expectations gives the better explanation of current inflation: backward-looking, forward-looking or some combination of the two? Using Generalized Method of Moments (GMM) and annual data over the period 1976-2008, the results of hybrid Philips model show that inflation in Iran is significantly determined by backward-looking inflation expectations, forward-looking inflation expectations, the output gap, exchange rate, and liquidity growth. However, backward-looking inflation expectations are more important than forward-looking expectations. The findings imply that managing inflation expectations, liquidity growth, and exchange rate can complement each other to achieve overall price stability.
Shadi Amiri, Masoud Homayounifar, Mostafa Karimzadeh, Mohammad Ali Falahi,
Volume 15, Issue 2 (6-2015)
Abstract
This study investigates the time-varying correlations among oil and coin prices, and exchange rate in Iran. Since investment is a key factor in economic growth and development, so the necessary funds should be provided and directed towards manufacturing and industrial sectors. In addition, understanding the relationships among financial variables allows to the investor to reduce overall portfolio risk without harming to the return on investment. In this paper we use monthly data of the oil and coin prices, and exchange rate in Iran over the period 1991:3 to 2011:2 and examine time-varying correlations using Dynamic Conditional Correlation - Generalized Autoregressive Conditional Heteroskedasticity (DCC-GARCH) approach by G@RCH6 software. The analyses made in milieu of the world financial crisis (2008) show that the conditional correlations among assets are time-varying and world financial crisis causes significant changes in dynamic relationships among assets under study in Iran.
Mohammad Lashkary, Sadegh Bafandeh Imandoust, Nayyereh Hasannia, Ali Goli,
Volume 15, Issue 3 (11-2015)
Abstract
Since various economic sectors, in particular housing sector, need to bank loans, the variations in lending behavior of banks due to changes in key economic variables may jeopardize the sound economic activities. In this study the lending behavior of Bank Maskan of Iran was modeled by a Vector Auto-regression (VAR) model during 1991-2011. The results of long run Vector Error Correction Model (VECM) indicated that the broad money supply, inflation rate and stock price fluctuations have indirect effects on lending behavior of Bank Maskan, however the effect of exchange rate variations is positive. In addition, the results of short run VECM showed that variations in the broad money supply have direct effects on lending behavior of Bank Maskan, but inflation rate, exchange rate and stock price fluctuations have no significant effects.
Mohammad Reza Lotfalipour, Bahareh Bazargan,
Volume 16, Issue 1 (5-2016)
Abstract
Trade balance is regarded as both main macroeconomic factor and strategic constraint in developing countries. Exchange rate, which is defined as parity relationship between national currency and foreign currencies, is a vital determinant of countries’ trade balance. As the real effective exchange rate measures the changes in prices and relative costs by a common currency, it is the most popular indicator to measure competitiveness.
On one hand, fluctuation of this index represents disequilibrium in the economy, and on the other hand, it is the cause of more instability. Since the direction and size of the effects of real exchange rate on trade balance is an important macroeconomic issue, this articleinvestigates the real effective exchange rate changes on trade balance in Iran and its’ major partners using the Vector Error Correction Model ( VECM ) over the period 1993-2011. The results indicate that the real effective exchange rate volatility reduces trade balance only for Germany in the short run and rises it for Italy in the long run.
Volume 16, Issue 4 (7-2014)
Abstract
In recent years, Iran has experienced high level depreciation of the Nominal Exchange Rate (NER). The ultimate effects of such depreciation on Iranian families’ welfare and income distribution have been a challenging issue among policymakers and researchers. Accordingly, this study evaluates the economic effects of NER depreciation on the rice market, using spatial price equilibrium model. The model was calibrated for the base year 2010 and was executed using GAMS programming language and was solved by the PATH solver. The results suggested that decreasing the NER would be detrimental. Social welfare is adversely affected by depreciation of the NER. This shock would also decrease real and per capita income and increase slightly the incidence, the gap, and severity of poverty. Also, the regional effects were found to vary, depending on being a net exporter or a net importer region. Overall, this study contributes to previous studies by considering income effects and import exemptions in the model.
Samad Aziznejad, Akbar Komijani,
Volume 17, Issue 1 (4-2017)
Abstract
Exchange rate is the key variable in each economy. This paper tries to examine the effects of volatilities in exchange rate market on selected macroeconomic variables in Iran, and to present some strategic recommendations. Inspiring by Danmola method, this paper uses the variance decomposition and impulse response function based on Cholesky decomposition of Vector-autoregressive method. The findings show that real exchange rate volatility has the most effect on profit rate of the short-run deposits during 2001:Q1-2012:Q4. Following profit rate of short-run deposits, the highest variation in inflation rate is explained by real exchange rate volatility. The economic growth is affected positively by exchange rate volatility (EEV) in both short- and long-run, but it is influenced negatively by EEV in the midterm. On the other hand, trade balance is deteriorated by shocks in real exchange rate with short lags. Our findings are compatible with those of similar studies among developing countries.
Volume 17, Issue 5 (9-2015)
Abstract
Among the food products, grains play an important role in the consumption patterns of people, especially in the developing countries. Since Iran's main source of public dietary energy comes directly from grains, investigating and identifying the determinants of import of these products can be an important step towards food security. Most experimental studies consider import of grains as only a function of relative prices and real income, whereas, income inequality is also a variable affecting the import of grains. The present study evaluates the effect of income inequality on the import of grains in Iran's economy during the years 1969-2009. For this purpose, the relationship of grain import with gross domestic production (GDP), grain production, real exchange rate, and income inequality was evaluated for Iran by using the Vector Error Correction Model (VECM). The results indicate that the relationship between income inequality and grain import is positive and its coefficient is +0.55%. This implies that 1% increase in income inequality increases grain import by 0.55%. Also, the effect of gross domestic production on grains import is positive and the real exchange rate and grains production variables have a negative and significant effect on grains import.
Mohammad Naghibi, Peyman Vahedi,
Volume 18, Issue 2 (7-2018)
Abstract
The real effective exchange rate and its uncertainty are among the most important macroeconomic variables that affect different economic sectors from various aspects. Since the changes in exchange rate have no identical impacts on all sectors of the economy and regarding considerable importance of industrial development on economic development, this study examines and evaluates the effects of real effective of exchange rate and its uncertainty on the value-added of industrial subsectors based on the two-digit codes ISIC-REV4 using Panel data and Engel-Granger methods during 1979-2014. The results show that the real effective exchange rate is of different effects on various subsectors of the industry while its uncertainty has no effect on sub-sectors’ value-added. Consequently, there is no single exchange rate policy in industrial sector due to different foreign exchange requirements in its subsectors.
