The Impacts of Unified Exchange Rate System on Domestic Price in Iran

Ali Reza Kazerooni and Majid Feshari
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Ali Reza Kazerooni: Associate Professor, Economics Department, University of Tabriz
Majid Feshari: Ph.D. Student of Economics, University of Tabriz

Iranian Economic Review (IER), 2009, vol. 14, issue 2, 71-96

Abstract: The main purpose of this paper is to examine the impact of exchange rate unification policies on the domestic price in Iran using a co-integration approach between 1971and 2002. For doing this, a weighted average of exchange rate under the multiple exchange rate regimes is used as a proxy for the unified exchange rate. The impact of this unified exchange rate on the domestic price alongside with other variables is evaluated by multivariate Johansen’s co-integration technique. The main finding indicates that the unified exchange rate has a positive effect on the domestic price in Iran. In other words, the move from multiple exchange rate system to unified exchange rate maybe accompanied with inflationary pressure.

Keywords: Foreign exchange rate unification; Iranian economy; Co-integration test; Domestic price. (search for similar items in EconPapers)
Date: 2009
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