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Iran's Trade Balance and Dynamics of the J-Curve Mechanism in the Uncertainty Conditions
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| Seyyed Komail Tayebi *, Mehdi Yazdani, Azad Khanzadi |
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Abstract: (5278 Views) |
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. |
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| Keywords: J, Curve, Iran\'s Trade Balance, Uncertainty, Exchange Crisis, Exchange Rate Unification |
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Full-Text [PDF 339 kb]
(5473 Downloads)
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Type of Study: Empirical Study |
Received: 2014/07/26 | Accepted: 2014/07/26 | Published: 2014/07/26
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