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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.

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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.  

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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. 

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This study examines the effects of ownership, competitiveness, firm size and research and development (R&D) expenditure on exports of Iran's vehicles manufacturing industries. A panel data model is set up using 4-digit codes of the International Standard Industrial Classification (ISIC) related to vehicles manufacturing industries in Iran over the period 2005-2013. The dynamic panel data technique and two-stage generalized method of moments (Arellano and Band method) are used to estimate the econometric model. The estimation results indicate positive and significant effects of private ownership, R&D expenditure and competitiveness on export intensity in Iran's vehicles manufacturing industries. According to the positive effect of the private ownership on exports, facilitating the entrance of the other private firms aiming at producing and exporting of vehicles’ products can be a considerable step for promoting foreign trade in Iran. In addition, findings show that real exchange rate has no significant effect on export intensity among mentioned industries. Moreover, higher tariff rates on imports of vehicles in Iran and higher relative prices of vehicles compared to world prices have limited the potential of exporting the products of such industries.
 

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The relationship between exchange rate changes and trade balance has always been one of the major issues in theoretical literature and policy circles. A new approach to theoretical literature and empirical work suggest that the interaction of these two variables depends on a number of issues, including how each country's export and import markets interact, and the degree to which exports of goods are dependent on imports. For this purpose, in the paper, the relationship between exchange rate and trade balance in the Iranian economy is examined by considering the crucial role of Intra –industry trade in the form of smooth transition regression model for the period 2001: 4 to 2018: 4. The results showed that the coefficient of effect of the exchange rate on the trade balance in each period is affected by the intra--industry index, so that the lower the index, the less the effect of the exchange rate increase on the trade balance, and as this index improves, the impact is greater. This means that the positive effects of money devaluation on the trade balance can be benefited when the competitiveness of domestic products with similar foreign goods in each sector increases.