Recognizing the Impact of Fluctuations in Foreign Exchange Rates and Interest Rates on the Index of Economic Freedom in Iran

Subject Areas : Agriculture Marketing and Commercialization

marjan meymandi ¹ , somayeh shokravi ² , Akbar Bagheri ³

1 - Department of Management and Accounting . Islamshahr Branch. Islamic Azad University . tehran . iran
2 - Department of Management and Accounting, Islamshahr Branch, Islamic Azad University, Tehran, Iran
3 - Department of Economics Islamic Azad University, Islamshahr branch, Islamshahr, Iran

Received: 2023-05-10 Accepted : 2023-08-13 Published : 2023-12-01

Keywords: Fluctuations, Interest rates, Economic Freedom Index, Foreign Exchange Rates,

Abstract :

This study aimed to recognize the impact of fluctuations in foreign exchange rates and interest rates on the index of economic freedom in Iran. The research method was practical and descriptive-analytical. The vector auto regression model was used for examining the research model and the Johansen- Juselius procedure was applied for determining the coefficients in the long-run situation. The statistical sample was related to macroeconomic variables and the index of economic freedom in Iran between1996-2019. Fluctuations of the real foreign exchange rate (RER) and real interest rate (RIR) were the independent variables of the study. The dependent variable was the economic freedom index (EFI). Financial development (FIN) and foreign direct investment (FDI) were the control variables. The data were analyzed using Eviews 10 and Excel 2016. The results indicated that fluctuations in the foreign exchange rates and interest rates have a significant impact on the economic freedom index of the country; i.e. as instabilities increase in the economic sections of the country, the economic freedom index decreases.

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