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Evaluation of market and official exchange rates applying the Balassa-Samuelson hypothesis
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Hosein Samsami   , Samaneh Amirshahi * |
| , samaneh.mrshh@gmail.com |
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Abstract: (522 Views) |
| Two exchange rate, the official and the market, in most developing countries, intensify economic fluctuations in most developing countries. The volume of transactions at the market exchange rate is much higher than the official exchange rate. For this purpose, the compatibility of the official and the market exchange rate with economic principles in the Balasa-Samuelson model in the period 1383 to 1396 for the Iranian economy is examined. Value added data and price index were used separately for tradable and non-tradable sectors and the official and the market exchange rate, despite the limitations in providing data. The results show that the prediction of the Balasa-Samuelson model on the effect of relative productivity on relative prices as well as the effect of relative productivity differences on the real exchange rate is confirmed. But the effects of tradable prices on the nominal exchange rate and the relative price difference on the real exchange rate are not consistent with the model. In the Iranian economy, productivity will affect both relative prices and the real exchange rate. |
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| Keywords: official exchange rate, market exchange rate, the balassa-samuelson model, relative productivity |
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Full-Text [PDF 841 kb]
(152 Downloads)
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Type of Study: Research |
Subject:
Special
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