Mahmood Khataei; Seyed Hadi Mousavi Nik
Volume 12, Issue 37 , February 2009, , Pages 1-19
Ebrahim Hadian; Hojat Parsa
Volume 12, Issue 36 , October 2008, , Pages 1-16
Abstract
The distributed lag effect of a unit change in one of the explanatory variables on the dependent variable is one of the major shortcomings of the standard linear egression model. The long run or error correction equation, with specifies a casual relationship between the inflation and its determinants, ...
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The distributed lag effect of a unit change in one of the explanatory variables on the dependent variable is one of the major shortcomings of the standard linear egression model. The long run or error correction equation, with specifies a casual relationship between the inflation and its determinants, states that a unit change in one of the explanatory variables can result in a change in the rate of inflation only during the period specified by the model. But in practice, changes in, for example, the country's money supply may affect inflation rate over a long period
This paper aims to estimate the adjustment path of the rate of inflation following exogenous monetary shocks. To do so, we use an ARDL model and time series data for the period 1961-2005 in the Iranian economy. The results indicate that one percent, once-and-for-all, increase in money supply positively affects the rate of inflation during three years. One percent increase in money supply at time t results in 0.42 percent in current period, 0.19 percent at time t+1 and 0.27 percent at time t+2 increase in the rate of inflation.
Alireza Amini; Zohre Hejazi Azad
Volume 11, Issue 35 , July 2008, , Pages 1-30
Abstract
In this study, we examine factors influencing the Total Factor Productivity (TFP) in the Iranian economy. These factors are the percentage of higher education employees as proxy for human capital, the government research and development capital stock and the ratio of actual output to potential output ...
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In this study, we examine factors influencing the Total Factor Productivity (TFP) in the Iranian economy. These factors are the percentage of higher education employees as proxy for human capital, the government research and development capital stock and the ratio of actual output to potential output as the index of capacity utilization. We estimate TFP using the ARDL (Auto-Regressive Distributed Lag) method covering data over the period 1968-2004. The results indicate that in the long run, the percentage of higher education employees, the government research and development capital stock and the capacity utilization have had positive and significant effects on productivity. In this period, in spite of increasing trend in human capital and the government R&D capital stock, TFP accounts for only five percent of the long run economic growth. The reasons for this meager share of TFP growth is reduced the degree of competitiveness, misallocation and inefficient use of resources in the economy.
Abolghasem Naderi
Volume 10, Issue 34 , April 2008, , Pages 1-29
Abstract
This articles aims at evaluating the effects of selectivity and endogeneity problems on returns to education caused by individuals' decision to attend school and to participate in the labour market. We apply conditional regression models (earnings functions) to tackle the problem of selection bias and ...
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This articles aims at evaluating the effects of selectivity and endogeneity problems on returns to education caused by individuals' decision to attend school and to participate in the labour market. We apply conditional regression models (earnings functions) to tackle the problem of selection bias and use instrumental variable technique to take into account the problem of endogeneity. Using data from the Tehran province survey of socio-economic characteristics 1380 and the U.S. current population census 1991, we found that (1) return to education is positive and substantial, (2) taking into account the problems of selection and endogeneity increases the returns to education estimates, and (3) the findings of Tehran province sample are similar to those of the U.S. sample. Therefore, the pattern of findings are the same and also consistent with theoretical considerations stating that the conventional estimates which do not deal with the problems of selection and endogeneity produce biased and inconsistent results.
Esfandiar Jahangard
Volume 9, Issue 33 , February 2008, , Pages 1-23
Morteza Naderi; Ahmad Sharbatoghlie
Volume 9, Issue 32 , October 2007, , Pages 1-29
Abstract
Freedom of choice and competition are viewed as vital factors for economic growth. In this paper, we use a growth model to examine the impact of economic freedom on the economic growth across the world countries for the period 1999-2004. Our study differs from the previous studies in terms of the ...
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Freedom of choice and competition are viewed as vital factors for economic growth. In this paper, we use a growth model to examine the impact of economic freedom on the economic growth across the world countries for the period 1999-2004. Our study differs from the previous studies in terms of the modeling, the scope of the study, and the selected sample. The results, however, are consistent with those of the previous studies. Given the fact that Iran’s position in the world is low in terms of economic freedom, that economic freedom has a significant role in economic growth, it is necessary for investors and firms to have suitable conditions for transparent and accurate decision-making. Creation of the favorable economic conditions is the responsibility of the government and thus, it is necessary to have defined policies and planning for the establishment of conditions for economic freedom in the society. Creation of social condition for economic freedom of economic agents is a convenient orientation that is favorable with economic growth policies and must be internalized in the Iran's economic policies.
Mohsen Mehrara; Alireza Abdi
Volume 9, Issue 31 , July 2007, , Pages 1-26
Abstract
This paper studies the impact of Rial's real devaluation and scale variables (domestic and foreign real income) on Iran's trade balance using the Johansen-Juselius and ARDL methods for the period 1338-1383 (1960-2004).
According to co-integration tests results, trade balance variables, ...
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This paper studies the impact of Rial's real devaluation and scale variables (domestic and foreign real income) on Iran's trade balance using the Johansen-Juselius and ARDL methods for the period 1338-1383 (1960-2004).
According to co-integration tests results, trade balance variables, domestic and foreign income, and black market exchange rates are co-integrated indicating a long run equilibrium relationship among them. Moreover, all the long and short run coefficients have expected signs and are stable during the sample period. However, the official exchange rate is not able to explain trade balance fluctuations satisfactorily in this period. The results of co-integration tests reject the null of long run equilibrium relationship among trade balance, scale variables and official exchange rate. The diagnostic tests in the error correction models with official rate imply serious mis specifications as well. The study suggests the need to monitoring the black market rather than official exchange rate.
Ahmad Mojtahed.; Azam Ahmadyan
Volume 9, Issue 30 , April 2007, , Pages 1-21
Abstract
The main purpose of this paper is to examine an appropriate exchange rate policy in Iran . Most of the studies have suggested a flexible exchange rate policy with a coordination between monetary and exchange rate policies for the Iranian economy. In this paper, we test the hypothesis that the managed ...
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The main purpose of this paper is to examine an appropriate exchange rate policy in Iran . Most of the studies have suggested a flexible exchange rate policy with a coordination between monetary and exchange rate policies for the Iranian economy. In this paper, we test the hypothesis that the managed exchange rate policy is the most appropriate policy for Iran using the Mundell-Fleming model, and 2SLS method for period 1974-2004.
The estimated macroeconometric model is used to simulate the reaction of five exchange rates regimes to fluctuations of net asset from abroad in the banking system.
The results reveal that the managed exchange policy would yield more stable prices, imports, welfare and money stock .In contrast, a quasi-floating exchange rate policy in which the exchange rate is determined by the percentage of trade balance deviations, will result in the worst kind of volatility in prices, imports, welfare and money stock.
Ali Sadeghzadeh Yazdi; Ahmad Jafari Samimi; Zahra(Mila) Elmi
Volume 8, Issue 29 , February 2007, , Pages 1-15
Abstract
Demand for money is an important part of the macroeconomic models and the monetary policy. In this paper, we estimate the Iranian demand for money for the period 1958-2003 using the Autoregressive Distributed Lag (ARDL) method.
The results show that the real money balance, gross domestic ...
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Demand for money is an important part of the macroeconomic models and the monetary policy. In this paper, we estimate the Iranian demand for money for the period 1958-2003 using the Autoregressive Distributed Lag (ARDL) method.
The results show that the real money balance, gross domestic product, inflation, foreign exchange rate, and government budget deficit have been co-integrated with each other. We also use the error correction model for short-run dynamic analysis. The result shows the speed of adjustment toward the long-run balance is slow.
Seyyed Safdar Hosseini; Mohammad Reza Bakhshi
Volume 8, Issue 28 , October 2006, , Pages 1-13
Abstract
This Paper investigates impacts of macroeconomic variables on the demand for money in Iranian economy using an auto regressive distributed lag model (ARDL) and the data for the period 1340-1382. The results indicate that there is a unique cointegrated and stable long-run equilibrium relationship between ...
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This Paper investigates impacts of macroeconomic variables on the demand for money in Iranian economy using an auto regressive distributed lag model (ARDL) and the data for the period 1340-1382. The results indicate that there is a unique cointegrated and stable long-run equilibrium relationship between the real demand for money and its determinants such as: real GDP, interest rate, and inflation rate. These results reveal that the demand for money in Iranian economy is more sensitive to the real GDP than to the other macroeconomic variables (long term interest rate and inflation rate). Moreover, the long-term income and inflation elasticity of money demand is 2.620 and 0.038, respectively. This shows that money demand function is more elastic with respect to long-term income and inelastic with respect to price level. Also, adjustment coefficient for money demand is estimated to be 0.19. This means that the adjustment process for money demand would take 5 years.
Hasan Dargahi; Ahmad Parkhide
Volume 8, Issue 27 , July 2006, , Pages 1-31
Abstract
Since the advent of early business cycles theories based on self-sustaining behaviors, many theories and models have been suggested to explain causes of cyclical fluctuations. Although in the 1960s, with the acceptance of Keynesian ideas there was a less interest to identifying the sources of disturbances, ...
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Since the advent of early business cycles theories based on self-sustaining behaviors, many theories and models have been suggested to explain causes of cyclical fluctuations. Although in the 1960s, with the acceptance of Keynesian ideas there was a less interest to identifying the sources of disturbances, today the debate over the sources and propagation of economic fluctuations still rages among macroeconomists.
This paper uses a multisectoral business cycles model for identifyingication the role and importance of aggregate and sectoral shocks in business cycles of the Iranian manufacturing sectors. Aggregate shocks involve innovations in oil revenues, money supply, government expenditures, and real exchange rate, and productivity shocks are connsidered as sectoral shocks. Our results indicate that all types of shocks are important, but aggregate shocks are the dominant source of sectoral output fluctuations. Variance decomposition of the manufacturing output growth indicates that 85.4 percent of aggregate output disturbances can be explained by aggregate shocks. Therefore, macroeconomic policies inconsistent with industrial development requirements could disturb endogenous growth of the Iranian manufacturing sectors via weak total factor productivity. At the presence of the exogenous impulses, while aggregate shocks are significant sources of output fluctuations, it seems disturbances are threatening the long run economic and industrial growth, even in the oil boom periods.
Saeed Moshiri; Mahdi Rezvan
Volume 8, Issue 26 , April 2006, , Pages 1-24
Abstract
Operating in international market, the Iranian airline industry is one of the first organizations which have used IT in Iran, and therefore, a good case for analyzing the impact of IT on productivity at the firm level. In this study, we first estimate the productivity of the airline industry using ...
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Operating in international market, the Iranian airline industry is one of the first organizations which have used IT in Iran, and therefore, a good case for analyzing the impact of IT on productivity at the firm level. In this study, we first estimate the productivity of the airline industry using the Iranian National Airline data from 1962 to 2000 by the Data Envelop Analysis (DEA) and the Stochastic Frontier Analysis (SFA) methods. We then evaluate the impacts of IT on the Iranian major Airline corporation.Many different cases have been considered in estimating the productivity. In the DEA method, both constant and variable returns to scale have been applied. In the SFA method, different measures for output have been used from which the passenger- kilometer variable produced the most reasonable outcome. The results indicate that the productivity in the Iranian airline industry has been fluctuating within a fixed range before and after the period 1976-83 in which the productivity decreased dramatically, mostly due to the revolution and the Iraqi imposed war on Iran. Furthermore, IT has had a positive effect on the productivity since 1990.
Masoud Nili; Shahab Nafisi
Volume 7, Issue 25 , February 2006, , Pages 1-22
Abstract
Human capital is an important ingredient of the new growth theory and, therefore its estimation has become a vital element for the growth regression models. In spite of this importance, an estimation of human capital has not yet been made for Iran. In this paper, the average years of education of the ...
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Human capital is an important ingredient of the new growth theory and, therefore its estimation has become a vital element for the growth regression models. In spite of this importance, an estimation of human capital has not yet been made for Iran. In this paper, the average years of education of the labor force of Iran, as a proxy for the human capital, has been estimated for the period 1966-2000. Because of using labor force instead of the population, the real number of students instead of enrolment rates, and taking into account the elements such as changes in the education system in 1966-2000, immigration, mortality, unemployment rates, the current research provides a more reliable result than those obtained by using conventional methods like Barro and Lee (2000).
Hassan Sobhani; Hamid Azizmohammadloo
Volume 7, Issue 24 , October 2005, , Pages 1-31
Abstract
Investment is perceived as a major factor in job creation in almost all sectors of the economy and by the policymakers. In this paper, we investigate if investment has the same effect on the job creation in all the Iranian manufacturing sub-sectors using the data with two-digit ISIC codes.
...
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Investment is perceived as a major factor in job creation in almost all sectors of the economy and by the policymakers. In this paper, we investigate if investment has the same effect on the job creation in all the Iranian manufacturing sub-sectors using the data with two-digit ISIC codes.
Research findings reveal that the first to fifth strongest effects are among the “textile, wearing apparel and leather products", "wood and products of wood", "food, beverage and tobacco products", "machinery, equipment and metal instruments products", and "non- metallic mineral products", respectively. As for the "basic metal", "chemical products" and "paper, publishing and printing ", there is no significant statistical relationship between investment and employment.
Akbar Komaijani; Mohammad Nad Ali
Volume 7, Issue 23 , July 2005, , Pages 1-37
Abstract
The main goal of this paper is to examine an appropriate exchange rate regime in Iran. Most of the studies in Iranian economy have suggested a flexible exchange rate regime with a coordination between monetary and exchange rate policies.
In this paper, we test the hypothesis that ...
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The main goal of this paper is to examine an appropriate exchange rate regime in Iran. Most of the studies in Iranian economy have suggested a flexible exchange rate regime with a coordination between monetary and exchange rate policies.
In this paper, we test the hypothesis that the managed exchange rate regime is the most appropriate regime for Iran using the Mundell-Fleming Model, and 3SLS method for the period 1974-2001.
The estimated macro-econometrics model has been used to simulate the reaction of five exchange rate regimes to oil shocks. The results reveal that the managed exchange rates in terms of trade balance and purchasing power parity are expected to yield a more stable prices and non-oil GDP growth rates. In contrast, a quasi-floating exchange rate regime, in which the exchange rate is determined by the percentage of trade balance deviations, will result in the worst kind of volitility in non-oil GDP and inflation rates at the time of oil shocks.
Khosrow Piraee; Beitollah Akbary Moghaddam
Volume 7, Issue 22 , April 2005, , Pages 1-30
Abstract
This article exploits the conventional micro and macroeconomics relations such as production functions, costs and so on, in order to simulate Iran's economy in the form of a computable general equilibrium model. We use the Mixed Complementarity Problems (MCP) technique along with the GAMS software & ...
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This article exploits the conventional micro and macroeconomics relations such as production functions, costs and so on, in order to simulate Iran's economy in the form of a computable general equilibrium model. We use the Mixed Complementarity Problems (MCP) technique along with the GAMS software & its modeling process.
The purpose of this study is to investigate the consequences of both decreasing the agricultural sector (agricultural activities) subsidy, and the changes of the labour tax on the sectoral production and revenue of urban and rural households. This purpose we use the latest social accounting matrix (1375).
The results reveal that the reduction of agricultural sector subsidy will have a negative impact on the production of all other sectors. However, for agriculture sector the percentage of this negative impact is more significant than other sectors. Also its negative impact on the urban and rural revenue is considerable. The same situation is encountered for the changes in the labour tax. A rise of the laboure tax has negative impact on all other sectors but its reduction does not have any considerable positive impact on them.
Seyed Komail Tayyebi; Homayoun Ranjbar
Volume 6, Issue 21 , February 2005, , Pages 1-21
Abstract
This paper tends to estimate the long-run import budget share, arising from various supplying resources for Iran. The formulation is based upon typical model of the Almost Ideal Demand System (AIDS). After estimating import demand, we test the hypothesizes that import demand is homothetic, ...
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This paper tends to estimate the long-run import budget share, arising from various supplying resources for Iran. The formulation is based upon typical model of the Almost Ideal Demand System (AIDS). After estimating import demand, we test the hypothesizes that import demand is homothetic, homogenous and symmetric. Using the dynamic adjustment process of the first order of Error Correction Model (ECM), the paper estimates the long-run balanced import budget shares, domestic sales share as well as long-run expenditure and compensated price elasticites over the 1978-2002 period. Estimation results obtained indicate that implementing trade liberalization policy can possibly lead the share of domestic sales to decline, while total import budget share to grow resulting in trade expansion, and particularly, trade flows to be deviate from other partners to Iran’s second ten major trading partners.
Ebrahim Hadian; Anita Azimi Hosseiny
Volume 6, Issue 20 , October 2004, , Pages 1-25
Abstract
The aim of this paper is to measure the technical, allocative and economic efficiency of the Iranian banking system using Data Envelopment Analysis (DEA) approach. In this survey, the performance of ten Iranian banks are studied during the period 1997-1999. From the view point of technical, ...
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The aim of this paper is to measure the technical, allocative and economic efficiency of the Iranian banking system using Data Envelopment Analysis (DEA) approach. In this survey, the performance of ten Iranian banks are studied during the period 1997-1999. From the view point of technical, allocative and economic efficiencies, three banks, Melli, Keshavarzi and Industry and Mine are efficient. From the view point of technical efficiency, Export Development bank is efficient. The average of technical, allocative and economic efficiency during the period of study is 84.2%, 86.4% and 74.3%, respectively. The overall results indicate that the technical, allocative and economic efficiency of specialized banks are higher than that of the commercial banks.
Hamid Abrishami; Reza Mohseni
Volume 4, Issue 13 , February 2003, , Pages 1-32
Abstract
International trade theory argues that developing countries benefit from primary specialization because of the existence of comparative advantages and the utilization of the countries relative abundant factors. But at the same time, international specialization implies a high commodity ...
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International trade theory argues that developing countries benefit from primary specialization because of the existence of comparative advantages and the utilization of the countries relative abundant factors. But at the same time, international specialization implies a high commodity dependency which were criticized by some development economists. It is believed that international specialization of commodity implies a high economic dependency to export earnings. However, since export commodity prices were not predictable then high instability in prices caused export earnings instability. Prices or earnings variability induce macroeconomic fluctuations mainly defined as the national income instability.
This article analyzes the relationship between oil export earnings instability and economic growth in IRAN.
With regards to instability concept, macroeconomic consequences can be avoided and this problem can also be transmitted to other economic sectors.This article follows Feder's(1982) growth model and uses Johansen's (1988) cointegration system approach to analyze the effects of export earnings instability.Results show that export earnings instability does not affect the gross domestic product(GDP) in the long run, but it does effect it in the short run.
Karen Rosel Polenske
Volume 5, Issue 14 , April 2003, , Pages 1-26
Abstract
Many analysts investigating environmental and energy issues in developing countries. However Iran as a major producer and exporter of oil is different.The efforts to contuct industrial analyses to determine energy efficient low-pollution sectors in which to invest is misdirected for two reasions. First, ...
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Many analysts investigating environmental and energy issues in developing countries. However Iran as a major producer and exporter of oil is different.The efforts to contuct industrial analyses to determine energy efficient low-pollution sectors in which to invest is misdirected for two reasions. First, some sectors may, on the surface appear to be very energy-conserving and consequently, create only low levels of pollution because-analyst consider only the direct inputs into production process. If analysts consider only energy inputs through use of an input-output table, however they may find that "green" firm, in fact, "brown" firm . Second, the narrow facus of most on evironmental analyeses on firm in a particular location rather than on the entire supply chainserving the firm is misdirected.In this paper we examine these aspects and present several examples from our research on energy intensity in the Far East, and show how Structural Decomposition Analysis (SDA) of the sectors can help determine the source of the changes in energy intensity. Also we examine the supply chain serving firm which otherwise could lead to misdirected concerns.
Morteza Sameti; Majid Sameti; Mahshid Shahchera
Volume 5, Issue 15 , July 2003, , Pages 1-18
Abstract
The effectiveness of the current and capital expenditures of government are different to achieve the economic optimal growth rate in Iran. In this paper at first, the aggregate consumption was classified by income groups. Then, the effects of current and capital expenditures of government on the ...
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The effectiveness of the current and capital expenditures of government are different to achieve the economic optimal growth rate in Iran. In this paper at first, the aggregate consumption was classified by income groups. Then, the effects of current and capital expenditures of government on the economic growth rate were estimated by a system of simultaneous equations.The results show that the capital expenditures effect is more than current expenditures on economic growth rate.Separation of the consumption function in terms of income groups was useful to calculate income multipliers. In this situation, the results also show that the impact of current and capital expenditures on consumption of different income groups are not the same.
seyed komail tayebi; Shirin Arbabian
Volume 5, Issue 16 , October 2003, , Pages 1-22
Abstract
Technology and scientific knowledge developed by higher education play imperative role in the production process of manufacturing goods. Labor forces، in a higher level of education، are able to cause technological changes by which significant rises are occurred in commodity exporting capacity and ...
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Technology and scientific knowledge developed by higher education play imperative role in the production process of manufacturing goods. Labor forces، in a higher level of education، are able to cause technological changes by which significant rises are occurred in commodity exporting capacity and competitive ability in international markets. The present paper investigates the impact of higher education on Iran’s manufacturing exports، and it tests the hypothesis that improvement in higher education، particularly in long run، can influence positively the non-oil export supply. Specifying an empirical framework and then using data for the period 1966–1999، we employ the Johansen – Juselius co-integration method and Error Correction Model (ECM) to estimate، respectively، long-run and short-run determinants of Iran’s manufacturing export supply. Overall، estimation results obtained reveal the fact that there is a substantial significant flexibility of higher education coefficient in the long-run export model، whereas the correspondent short-run coefficient is not statistically significant. The implication is that the policy makers should consider enhancement in higher education as the human capital role in the promotion of Iranian non-oil exports.
Masoud Nili; Shahab Nafisi
Volume 5, Issue 17 , February 2004, , Pages 1-31
Abstract
Economic theory suggests a causal and positive relationship between human capital and economic growth. Empirical findings, however, report an insignificant and even negative relationship between the two, for many cases. This has been explained by some researchers as a result of neglecting the educational ...
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Economic theory suggests a causal and positive relationship between human capital and economic growth. Empirical findings, however, report an insignificant and even negative relationship between the two, for many cases. This has been explained by some researchers as a result of neglecting the educational distribution of labour force. In this paper, the significance of this explanation has been examined for the case of Iran. We have shown that, while the relationship between human capital and economic growth is significant and positive, it is statistically improved when the educational distribution of labour force is added to the model.
According to our findings, policy should give more priority to primary and secondary education as opposed to higher education.
Mehdi Razavi; Rassam Moshrefi
Volume 6, Issue 18 , April 2004, , Pages 1-37
Abstract
Unemployment of factors of production leads to lost opportunity costs, which undermines economic growth. On the other hand, labor employment, among other factors of production, can have significant economic, cultural, political as well as social impacts. During the first two decades after ...
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Unemployment of factors of production leads to lost opportunity costs, which undermines economic growth. On the other hand, labor employment, among other factors of production, can have significant economic, cultural, political as well as social impacts. During the first two decades after revolution, Iran experienced high population growth rate. Jobs were not created in proportion to increased population growth. As such, jobs were scarce, and high unemployment rate were conducive to bring about social and economic problems. To remedy these problems, policy makers are constantly seeking to understand and find practical solutions for unemployment in Iran. This article provides a dynamic analysis of labor employment behavior in Iran. In this context, a system methodology has been applied, and labor behavior in Iran is simulated. The final result of utilizing Okun’s law in Iran shows that any 2.5 percent increase in GDP, more than its potential growth rate, will lead to 2.8 percent decrease in unemployment rate.
Karim Eslamloueyan
Volume 6, Issue 19 , July 2004, , Pages 1-29
Abstract
Using an Autoregressive Distributed Lag approach & cointegration analysis, this paper examines the impacts of anticipated and unanticipated shocks to official exchange rate on black market exchange rate premium in Iran for the period 1980:1 – 2001:1. Following Barro (1977), Hoffman et al. (1984) ...
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Using an Autoregressive Distributed Lag approach & cointegration analysis, this paper examines the impacts of anticipated and unanticipated shocks to official exchange rate on black market exchange rate premium in Iran for the period 1980:1 – 2001:1. Following Barro (1977), Hoffman et al. (1984) and Pozo and Wheeler (1999) a two-stage model is developed to study the long-run movement of black market premium. In the first stage, we construct a forecasting equation for the official exchange rate. The predicted values of official exchange rate obtained from this equation are used to measure the anticipated shocks. The residuals of the estimated forecasting model are used as a measure of unanticipated shock to official exchange rate. In the second stage, we regress the black market premium on anticipated and unanticipated shocks derived in the previous stage. The results indicate that both anticipated and unanticipated shocks to official exchange rate have a significant negative impact on the black market premium in Iran. It is found that an unanticipated increase in the official exchange rate has a greater impact on the black market premium than the anticipated one. Using dummy variable technique to study the possibility of structural break in the premium movement, the paper finds that the policy of exchange rate unification of 1993 has changed the intercept and the slope of the premium equation. This means that this policy has caused a structural change in the premium movement. More specifically, the intercept has decreased and the slope has increased dramatically after the unification. Indeed, the anticipated devaluation of official exchange rate has had a positive impact on the black market premium between 1993 and 1995. Finally, the cointegration tests verify the existence of a long-run equilibrium relationship among variables.
