Title: Real exchange rate dynamics and implications for macroeconomic policy in Iran, 1961–92
Abstract: This thesis uses a partial equilibrium framework to examine the short- and long-run
determinants of the real exchange rate of the Iranian rial and the implications of
changes in this real exchange rate for the real side of the Iranian economy over the
period 1961–1992.
The long-run determinants of the real exchange rate are found to be the terms of
trade, trade policy, real income and investment, whereas in the short-run changes
in domestic credit expansion and the effect of the war with Iraq have additional
explanatory power.
The change in the real exchange rate is shown to have strong effects on the
demands for real imports and (non-oil) exports of Iran and on the level of real
output. The policy implications are that consistent macroeconomic policies need to
be pursued in conjunction with a dual exchange rate system.
Publication Year: 1996
Publication Date: 1996-01-01
Language: en
Type: dissertation
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