The Effectof The Real Effective Exchange Rate Misalignment on Iranian Non-Oil Exports: The BEER approach

Subject Areas : Financial Knowledge of Securities Analysis

Alireza Kazerooni ¹ , Zana Mozaffari ² , Maryam Krimi Kandoleh ³ , Moslem Amini ⁴

1 - استاد اقتصاد دانشگاه تبریز،
2 - دانشجوی دکتری علوم اقتصادی دانشگاه تبریز
3 - دانشجوی کارشناسی ارشد توسعه اقتصادی دانشگاه تبریز،
4 - کارشناسی ارشد علوم اقتصادی دانشگاه آزاد قزوین

Received: 2015-10-19 Accepted : 2016-01-05 Published : 2016-12-21

Keywords: real effective exchange rate, exchange rate misalignment, BEER, Johansen method, ARDL,

Abstract :

The main objective of this study is to examine the effect of real effective exchange rate misalignment on Iranian non-oil exports over 1982 - 2013.For this purpose, the equilibrium real effective exchange rate has been estimated by BEER approach. The relevant literatures indicate that oil price, fiscal policy indicator, foreign capital flow, trade openness, and terms of trade are main determinants of the equilibrium exchange rate. Using Johansen test indicates that there exist a long run relationship between real exchange rate and other variables. By using predicted value of real effective exchange rate and observe exchange rate the misalignment of real effective exchange rate is calculated. The empirical result of the misalignment indicates that in 2006, the misalignment reached to highest point, 18.67 percent which presents the overvalued Iranian currency. Moreover, the results of estimation show that all explanatory variables in the long term have a significant effect on non-oil exports. In this regard, GDP has a positive impact; the misalignment of the real effective exchange rate, real exchange rate and the terms of trade have a negative and significant effect on the non-oil exports.

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