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Analysis of Exchange Rate Pass-Through to Export Prices and the Impact of Inflation, and Income on It in Iran and Trading Partners: A GMM Estimator Approach
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Ali reza Tamizi *   |
| Payame Noor University , al_tamizi@yahoo.com |
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Abstract: (7171 Views) |
| Nowadays most countries, especially developing countries such as Iran, have to adopt export promotion policy in order to achieve economic growth and development. According to exchange rate pass-through (ERPT) models, investigating the effect of exchange rate changes on export prices is important issue for these countries. Accordingly, the purpose of this paper is to estimate exchange rate pass-through (ERPT) into export prices in Iran and its top trade partners over 2000-2010 applying Arellano-Bond GMM approach. Results show that ERPT for the mentioned countries is incomplete and close to one. Therefore it can be said that a large part of exchange rate changes are passed into export prices. The results also show that GDP has a significantly negative effect on of ERPD. It means that low income leads to high effect of exchange rate on export prices. According to the results, it also can be seen that inflation rate has a positive and significant effect on ERPT. According to the results, it is recommended that adopting appropriate policies, policymakers restrain exchange rate fluctuations and thereby minimize the instability of export prices. It is also suggested that in order to reduce ERPT to export prices and thus export price stability, some policies to be applied so that to control inflation and reduce domestic prices. |
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| Keywords: Exchange Rate Pass-Through, Arellano-Bond, GMM, Iran economy. |
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Full-Text [PDF 402 kb]
(3466 Downloads)
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Type of Study: Research |
Subject:
Special
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