International economy
Seyed Hasan Malekhosseini; Seyed Komail Tayebi; Monireh Rafat; Mahdi Yazdani
Abstract
Estimating the real exchange rate misalignment from the equilibrium value and exploring the factors affecting its changes is crucial for both economic policymakers and economic agents. Among the various factors affecting exchange rate misalignment, the exchange rate regime, has received less attention ...
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Estimating the real exchange rate misalignment from the equilibrium value and exploring the factors affecting its changes is crucial for both economic policymakers and economic agents. Among the various factors affecting exchange rate misalignment, the exchange rate regime, has received less attention in experimental studies. Accordingly, the present paper seeks to find out the answer to the question of how real exchange rate misalignment is affected by different exchange rate regimes. In other words, in which of the exchange rate regimes is the exchange rate misalignment less and in which one it is higher? To answer the question, the propensity score matching approach has been used. For this purpose, we have used data from 116 developing countries with different exchange rate regimes in 2019. Other factors such as real exchange rate misalignment in the previous period, inflation, the quality of institutions and financial development have been considered as match variables to net the effect of the exchange rate regime on real exchange rate misalignment and to separate the effects of other variables. The results showed that the real exchange rate misalignment from its equilibrium level has responded significantly to the type of exchange rate regime adopted by the countries, so that the floating exchange rate regime increases the real exchange rate misalignment in the selected developing countries wherever implemented. It can be argued that factors such as high exchange rate fluctuations, a more drastic adjustment in the price level, and speculative bubbles or contagion effects in the floating exchange rate regime have led to an increase in these misalignments.
International economy
Mahdi Yazdani; Fahimeh Mohebinia
Abstract
In the present study, the competitiveness of Iran's agricultural, industrial and in global markets services sectors has been investigated and analyzed. This measurement was taken by calculating four indicators of relative comparative advantage (RCA) at the level of two- and four-digit codes of ...
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In the present study, the competitiveness of Iran's agricultural, industrial and in global markets services sectors has been investigated and analyzed. This measurement was taken by calculating four indicators of relative comparative advantage (RCA) at the level of two- and four-digit codes of the International Industrial Standard Classification System for Economic Activities (ISIC) and using the data of Iran-world input-output tables during the period 1996-1995. The results show that out of 3 main subgroups of agriculture, only subdivisions of agricultural products, horticulture, livestock and poultry and hunting and other related activities, and out of 19 subdivisions of industry, only subdivisions of mineral extraction and other related materials, have RCA in all studied years. Other subsections have fluctuations in the presence or absence of comparative advantage, and some have a distinct RCA pattern. This situation has existed in 10 service sub-sectors of the country, but in general, the relative export advantage for service sub-sectors has not been identified in the whole period. In addition, the results of RCA index compatibility tests by performing 3 Cardinal, Ordinal and Dichotomous Measures show that the results of Ordinal tests are more satisfactory than the results of Dichotomous and Cardinal tests and therefore, the present study provides an Ordinal interpretation of RCA indicators in the formation of economic policies. Finally, the results of stability tests show that the indicators of comparative export advantage did not have a stable trend during the period.
Mehdi Yazdani; Hassan Dargahi; Roghayeh Akbari Afrouzi
Abstract
In general, the main objective of monetary policies is to stabilize the key macroeconomic variables, especially the inflation around its target. However, the role of some variables such as the real exchange rate can be important in optimal monetary policy responses to commodity terms of trade shocks ...
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In general, the main objective of monetary policies is to stabilize the key macroeconomic variables, especially the inflation around its target. However, the role of some variables such as the real exchange rate can be important in optimal monetary policy responses to commodity terms of trade shocks in commodity dependent emerging market economies, such as oil-exporting countries. This study tries to examine the impacts of different monetary policy in order to minimize the adverse effects of the economic shocks, by considering the real exchange rate gap into the flexible inflation targeting rule, in the Iranian economy. Hence, using a new Keynesian model, the demand and Phillips curves are estimated by autoregressive distributed lags (ARDL) method, based on the quarterly data during 1991:Q1-2014:Q4 and then a loss function for the central bank is minimized subject to above equations, by using the optimal control approach. According to the results, when the real exchange rate gap is calculated based on the lower targets, existence of this variable in the loss function of the monetary authorities lead to lower losses. But the higher real exchange rate gap is accompanied by higher losses. For summary, dependent on the real exchange rate gap, the monetary author can use the target of the exchange rate as a policy target. However, the flexible inflation targeting monetary framework, with regards to real exchange rate targeting, is not optimal policy in case of more rigid exchange rate regimes.
Mehdi Yazdani; Ali Esmaeili
Abstract
Financial crises have been frequently occurred in the global economy, and due to the negative impacts of financial crises on the real sectors performances, the economists tried to predict them. This study tries to investigate the role of the trade flows on occurrence of these phenomena and also the effects ...
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Financial crises have been frequently occurred in the global economy, and due to the negative impacts of financial crises on the real sectors performances, the economists tried to predict them. This study tries to investigate the role of the trade flows on occurrence of these phenomena and also the effects of contagion on trade flows. Hence, a sample of the emerging markets countries is selected during 1990-2013, and the simultaneous equations method has been used with discrete dependent variable (contagion of financial crises) in panel data. The results show that the trade flows lead to the acceleration of the contagion of the financial crises and on the other hand, the trade flows has been decreased by financial crises in the selected emerging markets countries. Finally, similar to the probability for contagion of the financial crises, more financial and regional linkages can increase the trade flows among selected countries.
Seyed Komail Tayebi; Khadijeh Nasrollahi; Mehdi Yazdani; Seyed Hassan Malekhosseini
Abstract
The exchange rate pass-through explains the relationship between changes in national currency and foreign trade of a country, while the responsiveness of trade to the currency changes depends on the perfect or imperfect degree of pass-through.
The objective of this study is to analyze the effect of ...
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The exchange rate pass-through explains the relationship between changes in national currency and foreign trade of a country, while the responsiveness of trade to the currency changes depends on the perfect or imperfect degree of pass-through.
The objective of this study is to analyze the effect of exchange rate pass-through on inflation in Iran as one of the main oil-exporting countries. To this end, we have specified a Structural Vector Auto-Regressive (SVAR) model including macroeconomic variables such as oil revenues, output gap, free market exchange rate, import prices, producer prices, consumer prices and money supply. To estimate the model, we have used quarterly data over the period 1991:1 - 2012:4.
Empirical results of the model estimation, which are in forms of impulse response functions and variance decomposition, have shown that although the degree of exchange rate pass-through to the price indices has been incomplete, changes in the exchange rate have led to fluctuations in the prices explaining partly Iran’s inflationary situation during the period under consideration. It also reveals the fact that a higher share of imported inflation implies the economy’s dependence on imports.
