Are current account deficits sustainable? New evidence from Iran using bounds test approach to level relationship

Hassan Heidari, Salih Katircioglu () and Narmin Davoudi

No 2012-24, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: This paper provides new evidence on the long-run relationship between exports and imports of the Iranian economy by employing bounds test approach to level relationship. In Iran, there have been many unusual policy changes and/or external shocks to the economy which resulted in the occurrence of multitude of structural breaks in macroeconomic variables. By taking these breaks into account, the results of the present study reveal that there is long run equilibrium relationship between imports and exports over the sample period, 1960-2007. This result confirms the finding of Arize (Imports and Exports in 50 Countries: Tests of Cointegration and Structural Breaks, 2002) by employing bounds tests to level relationship and suggests that current account deficits in Iran are sustainable.

Keywords: Exports; imports; current account; bounds test; Iran (search for similar items in EconPapers)
JEL-codes: C22 F10 F32 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-ara
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.economics-ejournal.org/economics/discussionpapers/2012-24
https://www.econstor.eu/bitstream/10419/57774/1/715116428.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201224

Access Statistics for this paper

More papers in Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().