Investigating the effect of currency market pressure and financial crises on the business cycles of the country, emphasizing the deviation of the exchange rate from the long-term equilibrium path

Investigating the effect of currency market pressure and financial crises on the business cycles of the country, emphasizing the deviation of the exchange rate from the long-term equilibrium path

Subject Areas : Financial Knowledge of Securities Analysis

moslem rezapour darsara ¹ , خسرو عزیزی ^{2 *} , Mehdi Fathabadi ³

1 - PhD student in Islamic Economics, Firuzkoh Branch, Islamic Azad University, Firozkoh, Iran
2 - Department of Economics, Firuzkoh branch, Islamic Azad University, Firozkoh, Iran . (Corresponding Author).
3 - Department of Economics, Firuzkoh Branch, Islamic Azad University, Firozkoh, Iran

Received: 2024-07-02 Accepted : 2024-08-14 Published : 2025-09-21

Keywords: currency market pressure, business cycles, exchange rate deviation from the equilibrium path, Markov switching regime change model 1-مقدمه,

Abstract :

In this study, we seek to investigate the effect of currency market pressure and financial crises on the business cycles of the country, emphasizing the deviation of the exchange rate from the long-term equilibrium path. For this purpose, the effect of study variables during the period of 1373 to 1401 is investigated by using the rotation model and Markov switching regime change. The method of the current research is practical from the point of view of the objective, and from the point of view of descriptive analytical nature, and from the point of view of statistical data collection, it is post-event research. Markov model estimation results show; The central bank intervention index (currency market pressure), exchange rate deviations from the long-term path, the effect of sanctions and the inflation rate have a positive effect on the production gap, and the variable of the growth rate of foreign exchange income from oil sales leads to the reduction of the production gap. The reason for these effects during these years should be analyzed from the Central Bank's intervention and the pressure of the currency market on the country's economy. In this way, the more the growth of the exchange rate has increased, the policy makers have tried to control the growth of the exchange rate and prevent its increase by reacting more to it.

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