Mirfarhad Sadigh Mohammadi; Ahmad Sarlak; Seyyed Abbas Najafizadeh; Mohammad Hassanzadeh
Abstract
Exchange rate as an interface between domestic and foreign economies, is one of the most important macroeconomic variables. Thus, exchange rate shocks can affect the income, consumption expenditure, and eventually, welfare of households via affecting export and import prices in combination with domestic ...
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Exchange rate as an interface between domestic and foreign economies, is one of the most important macroeconomic variables. Thus, exchange rate shocks can affect the income, consumption expenditure, and eventually, welfare of households via affecting export and import prices in combination with domestic prices. The objective of this paper is to investigate the effect of exchange rate shocks on the welfare of households in Iran using equivalent variation (EV) and compensating variation (CV) criteria. Due to the strengths of computable general equilibrium (CGE) models compared to single-equation models, we have calibrated a standard CGE model based on social accounting matrix (SAM) for the year 2011, and have compared changes in the welfare of urban and rural households via simulation of the exchange rate increase. The results show that exchange rate increase lowers the welfare of urban and rural households, and this effect is stronger for urban households than rural households. Stronger exchange rate shocks lead to greater welfare losses. Therefore, differences in welfare loss between urban and rural households must be taken into account in plans and protective measures aimed to mitigate the negative impacts of exchange rate shocks.
Economic Growth
Abbas Ali . Rezaei.; Ali Raeispour; Mohsen Zayandehroodi; Seyyed Abdolmajid Jalaee
Abstract
Purchasing power parity remains an important issue for scholars in the international Economics. The validity of this theory is important not only for empirical studies but also for policy makers. The PPP theory express that due to arbitrage in the international commodity market, the real exchange rate ...
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Purchasing power parity remains an important issue for scholars in the international Economics. The validity of this theory is important not only for empirical studies but also for policy makers. The PPP theory express that due to arbitrage in the international commodity market, the real exchange rate is expected to return to its equilibrium level in the long run. Finally, the researchers concluded that one of the major macroeconomic issues that has been linked to many political debates is the exchange rate, which is a non-linear real exchange rate behavior. Given the importance of the subject in this study, we decided to investigate the asymmetric measurement of purchasing power parity test using nonlinear auto regressive distributed lag model. In this context, Iran's purchasing power parity with Japan, Norway, Saudi Arabia, Britain and the United States was examined during the period from 1981 to 2017. The results show that in the long run, price shocks have an asymmetric effect on purchasing power parity in Japan, Saudi Arabia, and the United States, while they are symmetric in Norway and the United Kingdom. Moreover, in the short run, price shocks in Japan and Saudi Arabia will have an asymmetric effect on purchasing power parity, while the effect of price shocks in Norway, England and the US on purchasing power parity will be rejected in the short run.
Economic Growth
Hossien Amiri; Mohsen Salehi Komroudi; Mahnaz Pasban
Abstract
Macroeconomic conditions and the relationship of macroeconomic variables have a major impact on the economic performance of countries. Understanding these relationships helps policymakers manage macroeconomics better. Therefore, this study examines the relationship between economic growth, inflation, ...
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Macroeconomic conditions and the relationship of macroeconomic variables have a major impact on the economic performance of countries. Understanding these relationships helps policymakers manage macroeconomics better. Therefore, this study examines the relationship between economic growth, inflation, interest rate and exchange rate in selected Muslim countries (Bahrain, Bangladesh, Egypt, Indonesia, Iran, Malaysia, Pakistan, Kuwait, Oman and Qatar). Therefore Panel VAR method was used for this purpose. The study used panel data from selected countries over the period 2000–2016. According to the results, all variables are stationary and the model was stable. According to Granger causality results inflation rate, exchange rate and interest rate were the cause of economic growth; inflation rate, economic growth and exchange rate were the cause of economic growth rate; inflation rate, economic growth and interest rate were the cause of exchange rate and only inflation had not the Granger's causality. Exchange rate, interest rate, and inflation had positive effects on economic growth based on impulse-response functions. Exchange rate, interest rate, and economic growth had very short-term and negatively positive effects on themselves. Exchange rate, inflation and economic growth have had a negative effect on the interest rate. Finally, the effect of interest rate is unclear on exchange rate and inflation rate and economic growth had negative effect on economic growth.
International Commerce
hana abolhasanbeigi; Alireza Kazerooni; Mahdi Barghi Oskooee; Hossein Asgharpur
Abstract
Inflation volatility is one of the characteristics of Iranian economy over the past four decades. Inflation volatility by creating macroeconomic instability can affect the relation of economic variables. The purpose of this study is the evaluation of the impact of nonlinear inflation volatility on the ...
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Inflation volatility is one of the characteristics of Iranian economy over the past four decades. Inflation volatility by creating macroeconomic instability can affect the relation of economic variables. The purpose of this study is the evaluation of the impact of nonlinear inflation volatility on the relationships between the Iranian trade balance with the exchange rate during the 1973-2016. For this purpose, firstlyinflation volatility by using EGARCH method has been estimated and the model was estimated by Markov-switching model. The results show that the behavior of trade balance in Iran can be divided in 3 regimes (high, medium and low trade deficit). Increased exchange rate has induced the improvement of trade balance in 3 regimes. The effect of inflation volatility on the relationship of exchange rate to trade balance in the high and medium trade deficit regime is insignificant. Whereas in the regime 3 (low trade balance deficit) is negative and significant. So that in the regime 3(low trade deficit) inflation volatility has caused to debilitation of exchange rate effect on the trade balance and with the increase in inflation volatility exchange rate effect on the trade balance is further debilitation.
Asma Koochakzadeh; Sayyed Abdolmajid Jalaee
Volume 4, Issue 16 , November 2014, , Pages 20-11
Abstract
Volatility in currency exchange rate and the resulting uncertainty is one of the major variables in macroeconomics that affects different economic sectors in various aspects. Since these fluctuations and the resulting uncertainty do not affect all economic sectors in a similar way, this study aims to ...
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Volatility in currency exchange rate and the resulting uncertainty is one of the major variables in macroeconomics that affects different economic sectors in various aspects. Since these fluctuations and the resulting uncertainty do not affect all economic sectors in a similar way, this study aims to investigate the effect of uncertainty in the actual currency exchange rate on development of economic sectors in Iran using combined data over the period between 1991 and 2011 through panel method. The results obtained from this study indicate that uncertainty in the exchange rate has negative and significant effects on development of economic sectors. This effect was higher in industry, mining, agriculture, transportation and communication, hotels and restaurants, and construction sector with -0.51, -0.40, -0.35, -0.27,-0.24, and -0.23 respectively.
Hadi Ghaffari; Mehdi Jalouli; Ali Changi Ashtiani
Volume 3, Issue 10 , June 2013, , Pages 58-41
Abstract
International sanctions against Iran have been lead to an increase in demand of foreign exchange and ultimately cause an increase in exchange rate. In this study, we aim to investigate and forecast the consequences of exchange rate increase on economic growth of major economic sectors of Iran during ...
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International sanctions against Iran have been lead to an increase in demand of foreign exchange and ultimately cause an increase in exchange rate. In this study, we aim to investigate and forecast the consequences of exchange rate increase on economic growth of major economic sectors of Iran during 1976-2014. For this purpose, we used a short scale macro-econometric model which has been estimated by the new co-integration approach. The results show that an increase in exchange rate will reduce the production of all economic sectors. Also, the growth rate of all economic sectors will be reduced to its minimum and then will increase. Also, we have come to the conclusion that the production of oil & gas sector will be reduced more than the other sectors.
