The Effect of Exchange Rate on the Iran’s Tourism Balance

Hossein Panahi (), Sara Masoomzadeh () and Somayeh Razzaghi ()
Additional contact information
Hossein Panahi: Associate Professor of Economics, University of Tabriz
Sara Masoomzadeh: M.A. in Economics, University of Tabriz
Somayeh Razzaghi: Ph.D. Candidate in Economics, University of Tabriz

Quarterly Journal of Applied Theories of Economics, 2017, vol. 4, issue 2, 127-142

Abstract: In economic literature, the effect of exchange rate fluctuations on the balance of payments is highly important. Tourism is one of the main sub-sections of the balance of payments. Using vector error correction model, this paper identifies the effect of exchange rate changes on the balance of payments by assessment the existence of J-Curve in tourism industry over the period of 1995 to 2013.The results confirm the existence of J curve in Iran's tourism balance of payments. It means that exchange rate appreciation has reduced tourism revenues in the first period but after six periods it has increased tourism revenues and improved its balance of payments. Also revenue of this industry is over than it`s expenditures. In other word, the shock on the exchange rate, has improved tourism balance of payments after a period of deterioration. Also, the results of the data analysis of export-import and balance of payments functions confirms that export function has highly been effected by changes in exchange rate. In other word 0.89 of export function change`s is explained by exchange rate`s changes. Import function has also highly been effected by changes in exchange rate. It means 0.249 of import function change`s is explained by exchange rate`s changes. Furthermore, tourism balance of payments is more sensitive to changes in Iran’s revenues. On the other hand 0.395 changes in balance of payment has explained by domestic revenue`s changes.

Keywords: Exchange Rate; Tourism Balance of Payments; J- Curve; Vector Error Correction (search for similar items in EconPapers)
JEL-codes: E21 F31 F50 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations:

Downloads: (external link)
http://ecoj.tabrizu.ac.ir/article_6477_a4c7c4f622eb359807cb60055ce8a805.pdf Full text (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:ris:qjatoe:0077

Access Statistics for this article

Quarterly Journal of Applied Theories of Economics is currently edited by Sakineh Sojoodi

More articles in Quarterly Journal of Applied Theories of Economics from Faculty of Economics, Management and Business, University of Tabriz Contact information at EDIRC.
Bibliographic data for series maintained by Sakineh Sojoodi ().