Iran\'s Trade Balance and Dynamics of the J-Curve Mechanism in the Uncertainty Conditions (in Persian)

Seyyed Komail Tayebi, Mehdi Yazdani and Azad Khanzadi
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Seyyed Komail Tayebi: Iran
Mehdi Yazdani: Iran
Azad Khanzadi: Iran

Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), 2010, vol. 2, issue 3, 93-114

Abstract: Devaluation of a currency is theoretically one of economic policies in removing current account deficit. This mechanism is so-called J-Curve in the external economics. According to this approach¡ a decrease in the volume of a national currency leads a decrease to trade deficit. This paper addresses the question whether uncertainty conditions such as financial and exchange crises¡ and the process of exchange rate unification in Iran should maintain the J-Curve mechanism unchanged. In fact¡ the floatation degree of exchange rate has a sustainable role in exchange rate and current account changes that are explained in the process of J-Curve.To this end¡ this research applied autoregressive technique with distributed lags to the Iranian economy and its major trading partners. In addition¡ the impact of uncertainty on the J-Curve process has been examined by impulse response functions. Basically¡ the empirical results reveal the approved stability of the J-Curve process for bilateral trade balance between Iran and its partners¡ except for China and Italy.

Keywords: J; Curve; Iran\'s Trade Balance; Uncertainty; Exchange Crisis; Exchange Rate Unification (search for similar items in EconPapers)
Date: 2010
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