Document Type : ORIGINAL ARTICLE

Authors

• Farzaneh Ahmadian Yazdi ¹
• Mostafa Salimifar ²
• Mohammad Taher Ahmadi Shadmehri ²

¹ PhD student of ferdowsi university of Mashhad

² Professor of economics at Ferdowsi university of Mashhad

Abstract

This paper investigates the effects of trade liberalization and economic growth on non-oil bilateral trade balance of Iran and China over the period 1981-2012. For checking the stationarity of the variables and validity of the obtained results, the Augmented Dicky-Fuller test (ADF) and Perrone structural break test is employed respectively. To estimate the coefficients of the variables, ARDL model has been used. Using the framework of Oskooee and Brooks model, the findings of this paper show that increasing trade liberalization in short run and long run causes trade deficit for Iran. It means that from the view of demand side economists, higher trade liberalization deteriorates the trade balance of the country. Also, based on the obtained results, economic growth in both short run and long run has negative effect on non-oil bilateral trade balance of Iran and China. In addition, the real exchange rate has positive effect on the trade balance of Iran. It means that depreciation of national currency improves trade balance of Iran.

Keywords

• Trade Liberalization Index
• Non-Oil Bilateral Trade Balance
• ARDL model

Main Subjects

• International Commerce