The Study of The Impact of Real Exchange Rate on the Iran’s Non-Oil Trade
Mohammad Taher Ahmadi Shadmehri
Assistance Prophesore of Ferdowsi University of Mashhad
Farzane Ahmadian Yazdi
PhD Student of Ferdowsi University of Mashhad
Abstract
The article has studied the relationship between Non-oil trade balance of Iran and real exchange rate, base on Rose and Yellen corrected model, by using annual data during period 1970 - 2007.
Firstly, in order to investigate stationarity of the variables, the augmented Dicky-Fuller test has been used, and to check the validity of the Dicky-Fuller test, Perrone structural break test has also been applied. Moreove, in order to determine the long-run relationships and short-run dynamics between non-oil trade balance and real exchange rate, GDP of Iran and GDP of Germany, the ARDL model has been utilized. Despite the negative effect of the dummy variable of war, the GIRF test result has shown existence of the J curve phenomenon in the non-oil trade relations between Iran and Germany. Regarding to positive effects of real exchange reate changes on trade balance; devaluation policy can be usefull for policymakers to improve non-oil trade balance of Iran-Germany.
Key words: Real Exchange Rate, Non-oil Trade Balance, ARDL Model, J Curve.
JEL Classification: C32, F50, F59 |
