The Journal of Economic Studies and Policies

The Journal of Economic Studies and Policies

The Effect of Real Exchange Rate Volatility on Non-Oil Export in Iran

Document Type : Original Article

Authors
Behzad Salmani 1
Ali Rezazadeh 2
1 Assistant Professor of Economics, University of Tabriz
2 PhD student in Economics, University of Tabriz
10.22096/esp.2011.26187
Abstract
Iran's share of world exports during the recent years was not remarkable. Therefore, development of nonoil export is necessary to reduce dependence on oil revenues. Real exchange rate is one of the important variables affecting the non-oil export. In this context the behavior of real exchange rate effects on different economic variables, such as export is important. The main objective of this study is to investigate the effects of real exchange rate volatility on the non-oil export during the years of 1971-2006 in Iran. To achieve this purpose, the model of study is estimated using Johansen Juselius cointegration and VECM approach. The findings indicate that the domestic and foreign GDP have positive long-time effect on real export in Iran economy. The terms of trade and real exchange rate volatility indices have negative effects on export in the study period. These findings are compatible with theoretical and empirical studies in developed and developing countries. The above findings were approved by the impulse response functions results. The main policy implication of this study is that, the government by using appropriate exchange and monetary policies should reduce the volatility of real exchange rate.
Keywords
Iran
Export
Real Exchange Rate Volatility

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