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:: Volume 27, Issue 91 (Quarterly journal of economic research and policies 2019) ::
qjerp 2019, 27(91): 323-358 Back to browse issues page
The Impact of Exchange Rate shocks on Trade Balance of Iran: A Dynamic Stochastic General Equilibrium Approach
Mahdieh Iranmanesh , Sayed Abdolmajid Jalaee * , Mohsen Zayandeh Roody
Shahid Bahonar University of Kerman , jalaee@uk.ac.ir
Abstract:   (3252 Views)
The trade balance is one of the most important macroeconomic topics and one of the strategic macroeconomic constraints for developing countries. The exchange rate is recognized as one of the key factors affecting the trade balance of countries. Exchange rate fluctuations, which causes the fluctuations in relative prices, by destabilizing the economic conditions and increasing the inflation would lead to increase uncertainty in foreign trade market. Some of the consequences of uncertainty are the reduction of trade volume, foreign direct investment, and economic growth. In this study, a neo- Keynesian DSGE model for a small open economy is used to investigate the effect of exchange rate fluctuations on the trade balance of Iran. The success of the model in simulation is observable by studying the moments of the studied variables with the real data of Iran's economy. By estimating the parameters of the model using the Bayesian method during the period of 1990-2016, the results of simulation of the model variables indicate that the positive shock of exchange rate has led to an increase in oil and non-oil exports. Based on the results, foreign exchange shocks have led to improvement of exports and reduction in imports, on the other hand, it has led to improvements in the current account and capital account.
 
Keywords: Exchange Rate shocks, Balance Trade, Dynamic stochastic general equilibrium
Full-Text [PDF 1045 kb]   (682 Downloads)    
Type of Study: Research | Subject: Special
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Iranmanesh M, Jalaee S A, Zayandeh Roody M. The Impact of Exchange Rate shocks on Trade Balance of Iran: A Dynamic Stochastic General Equilibrium Approach. qjerp 2019; 27 (91) :323-358
URL: http://qjerp.ir/article-1-2127-en.html


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Volume 27, Issue 91 (Quarterly journal of economic research and policies 2019) Back to browse issues page
فصلنامه پژوهشها و سیاستهای اقتصادی Journal of Economic Research and Policies
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