Document Type : Research Paper

Authors

1 Assistant Professor of Economics, Department of Economics, Faculty of Administrative Sciences and Economics, Vali-E-Asr University of Rafsanjan, Iran .

2 MSc of Economic, epartment of Economics, Faculty of Administrative Sciences and Economics, Vali-E-Asr University of Rafsanjan, Iran.

Abstract

EXTENDED ABSTRACT
INTRODUCTION
The main objective of this study is to analyze the impact of changes in the real exchange rate on the export performance of the non-oil sector. Export earnings are assumed of vital importance not only for developing but also for developed countries. Developed countries mainly export capital and final goods, while the main part of developing countries export consists of mining-industry goods especially natural resources. In this context, there are some challenges for countries with natural resource abundance, such as oi,l in comparison with other countries. The main point is that in parallel with the windfall of oil revenues these countries have to pay more attention to the development of the non-oil sector as well as its export performance ;because in most cases oil-driven economic development leads to some undesirable consequences such as Dutch Disease in oil-rich countries. In oil-dependent countries, the export of other goods can help reduce the effect of oil revenues on the country's trade basket. Several factors affect non-oil exports, one of which is exchange rate variable. exchange rate which is the price of a foreign currency in terms of domestic currencies, has an important effect on macroeconomic variables; Such as production, exports, the balance of payments, etc. By affecting the relative prices of domestic and imported goods, this rate can also affect other economic sectors of the country. Accordingly, exchange rates and shocks of this variable are one of the main factors affecting non-oil exports.
 
METHODOLOGY
Today, because many countries are experiencing continuous changes in politics and economics, it is expected that modeling macroeconomic variables with linear models and fixed parameters are not appropriate, so nonlinear models and temporal parameters have a comparative advantage. This study examines the impact of the exchange rate on non-oil exports in Iran from 1978-2017 by using nonlinear Markov-switching (MS) and Smooth Transition Regression (STR) models. Therefore, these two models are used to estimate the regime transfer rate due to the asymmetric exchange rate on non-oil exports. The studied variables have been collected from the websites of the Central Bank of Iran and the Bank of Commercial Partners. They include non-oil exports, exchange rates, Iran's GDP, GDP, and price index.
 
FINDINGS
The results of a sudden change of Markov-switching model (MS) show that the effect of exchange rate in the first regime is about 8.6 times the second regime, both of which have a positive effect on non-oil exports, So, the results of this method show the nonlinear, asymmetric, and positive effect of exchange rate on non-oil exports in Iran.However, in the Smooth Transition Regression model (STR), exchange rate coefficientsshowed different effects in the two regimes in a way that exchange rate in the first regime has a negative, insignificant effect on non-oil exports, but in the second regime it has a positive and significant effect on non-oil exports.
 
CONCLUSION
Overall, the results show that the effect of exchange rate on non-oil exports is nonlinear and asymmetric and this effect changes with the change in transfer rate of the regime;i.e. if the rate of transfer from a regime to another is immediate, the effect of exchange rate on non-oil exports changes rapidly, but if the transition rate is slow, it can reverse the effect of exchange rate on non-oil exports and even completely change the effect. In addition, the findings of this study can be useful for policymakers in the monetary and real sectors in Iran, especially in terms of exchange rate policy implementation and its impact on non-oil exports.

Keywords

Main Subjects

Akinlo, A. E., & Adejumo, V. A. (2014). Exchange rate volatility and non-oil exports in Nigeria: 1986-2008. International Business and Management, 9(2), 70-79.##Altintaş, H., Cetin, R., & Öz, B. (2011). The impact of exchange rate volatility on Turkish exports: 1993-2009. South East European Journal of Economics and Business6(2), 71-81. ##Aligholi, M., & Baradaran, A., (2019) The Patterns Of Non-Oil Exports Of The Country Affected By Exchange Rate Fluctuation.  JOURNAL OF BUSINESS ADMINISTRATION RESEARCH. 11 (21), 91-113. Available at: http://bar.yazd.ac.ir/m/article_1551.html?lang=en  [In Persian]. ##Ansarinasab, M., Manzari Tavakoli, Z. (2020). Modeling Gasoline Consumption Behaviors in Iran Based on Long Memory and Regime Change. Quarterly Energy Economics Review, 16(64), 125-149. Available at: https://iiesj.ir/browse.php?a_id=1145&sid=1&slc_lang=en [In Persian]. ##Ansarinasab, M., Mohammadi, Z. (2019). Investigation of Nonlinear Exchange Rate Behavior in Iran: Evidence from Markov Switching Model. Comparative Economics, 6(1), 21-40. Available at: https://economics.ihcs.ac.ir/mobile/article_4916.html?lang=en [In Persian]. ##Barakchian, S., M., Bayat, S., &  Karami, H. (2014), Structural Breaks and Modeling Behavior of Inflation-Comparison between Nonlinear and Time Varying Models, The Journal of Economics Studies and Policies, 2(1),51-74. Available at: http://economic.mofidu.ac.ir/article_25913.html  [In Persian]. ##Daee Karimzadeh, S., Imam Verdi, Gh., & Shayesteh, A. (2014). Investigating the Impact of Real Exchange Rate on Exports. The Journal of  financial Economics, 8(29), 151-174. Available at: http://ecj.iauctb.ac.ir/article_515680.html [In Persian]. ##Ebrahimi, M., Babaei Agh Ismaili, M., & Kafili, V. (2016). Investigate price regimes of two prime index in the world oil market(Brent and WTI) before and after the financial crisis: Evidence from the Markov regime switching model. Quarterly Journal of Quantitative Economics , 13(3), 57-83. Available at: https://jqe.scu.ac.ir/article_12537.html  [In Persian]. ##Emami Meybodi, A., & Shooreh Kennedy, A., A. (2011).  The Impact of Exchange Rate Changes on Export Prices of South and Southeast Asian Countries, Journal of Applied Economics, 2(6), 93-112. Available at: https://jae.srbiau.ac.ir/article_3851.html [In Persian]. ##Enders, W. (2004). Regime Switches in Interest Rates. Journal of Business & Economic Statistics, American Statistical Association, (20), 163-182. ##Fallahi, F., & Rogriguez, G. (2007). Using Markov-switching models to identify the link between unemployment and criminality. ##Hadian, E., Ojeemehr, S. (2014). Investigating the Behavior of Foreign Exchange Market Pressure Index in Iran: Using a Smooth Transition Autoregressive Model (STAR), Journal of Applied Economics Studies, 3 (10), 247-266. Available at: https://aes.basu.ac.ir/article_830.html  [In Persian]. ##Jafari Samimi, A., Azami, K., & Azizian, J. (2015). The effect of macroeconomics variables uncertainty on import of selected developing countries. Quarterly Journal of Quantitative Economics, 12(3), 27-49. Available at: https://jqe.scu.ac.ir/article_11892.html  [In Persian]. ##Jafari Samimi, A., Elmi, S., Dehghan, S.(2013),  The Study of Iran’s Monthly Inflation Rate Dynamics Using STAR Models., Quarterly Journal of Fiscal and Economic Policies, 1(3) ,5-22. Available at:  http://qjfep.ir/article-1-102-fa.html [In Persian]. ##Kazerooni, A.R., Mozaffari, Z., Karimi Kandoleh, M., & Amini, M. (2016). The Effectof The Real Effective Exchange Rate Misalignment on Iranian Non-Oil Exports: The BEER approach. The Journal of Financial Knowledge of Securities Analysis, 9(23), 95-113. Available at: https://jfksa.srbiau.ac.ir/article_9736.html?lang=en  [In Persian]. ##khoshnevis Yazdi, S., & Rajabzadeh, R. (2017). The Impact of Real Exchange Rate Changes on Non-oil Exports of Iran. Journal of Economics  and Business Research, 8(14), 43-59. Available at: http://jebr.azad.ac.ir/article_533008.html?lang=en  [In Persian]. ##Kouchakzadeh, A., &  Jalaei, S., A. (2013). Effect of exchange rate uncertainty on non-oil exports in Iran, Journal of Agricultural Economics Research, 5(3), 121-135. Available at: http://jae.miau.ac.ir/article_334.html?lang=en  [In Persian]. ##Mahdiloo, A., Sadeghi, H., & Assari Arani, A. (2015). Estimation of Non-Linearity Effect of Rent-Seeking Opportunities on Economic Growth in Iran: Using Markov-Switching Model. Journal of Economic Growth and Development Research, 5(18), 11-30. Available at: https://egdr.journals.pnu.ac.ir/article_1498.html?lang=en  [In Persian]. ##Mahmoudi, M., & Kohansal, M. R., (2020). The Investigation Of Effects Of Exchange Rate Volatility On Export And Value Added Of Iranian Food Industries (Application Of Structural Vector Auto-Regression Model). The Journal of MAJLIS & RAHBORD. 27(101), 59-94. Available at: https://www.sid.ir/en/journal/ViewPaper.aspx?ID=738175 [In Persian]. ##Mousavi, S. S., Haghighat, J., & Salmani bishak, M., R. (2014), The Impact of Human Capital on Economic Growth in Iran: A Nonlinear Approach, Iranian Journal of Economic Research,20(63), 121-144. Available at: https://ijer.atu.ac.ir/article_4096.html?lang=en  [In Persian]. ##Nunejad, M., & Parvizi Kashkouli, F. (2015). The Effect of Exchange Rate Volatility on the None-Oil Exports of Iran to Major Trade Partners. The Journal of Macro and Strategic Policies, 3(12), 99-122. Available at: http://www.jmsp.ir/article_13604.html  [In Persian]. ##Nweke, A. M., Eze, O. M., & Atuma, E. Analysis of the Effect of Exchange Rate Depreciation on Export Performance in Nigeria. ##Panda, S., & Mohanty, R. K. (2015). Effects of exchange rate volatility on exports: Evidence from India. Economics Bulletin, 35(1), 305-312. ##Pedram, M., shirinbakhsh masulle, Sh., A., & Rezaei Abyaneh, B.(2012) Investigating the asymmetric effects of exchange rate fluctuations on the prices of exported goods, Quarterly Journal of Economic Modeling Research, 3 (9), 143-166. Available at: http://jemr.khu.ac.ir/article-1-397-fa.html  [In Persian]. ##Rasekhi, S., Shahrazi, M., and Abdollahi, M., R. (2012). Asymmetric Effect of Exchange Rate and its Volatility on Iran’s Non Oil Export, Economic growth and development research,  2 (7), 81-90. Available at: https://egdr.journals.pnu.ac.ir/article_126.html  [In Persian]. ##Razavi, S., a., Salimifar, M., & Naji Maidani, A,. A. (2013). Exchange Rate and Its Impact on Non-Oil Exports in Iran, Quarterly Journal of Economic Strategy , 3(8). Available at: https://profdoc.um.ac.ir/paper-abstract-1042650.html  [In Persian]. ##Sabznejad, A., & Abedi, H. (2016). The Impact of Exchange Rate Fluctuations on Iran's Exports to the Major Country of the Business Party Case Study: China. Comprehensive Conference on Management and Accounting Sciences, Tehran, Secretariat of the Comprehensive Conference on Management and Accounting Sciences. Available at: https://civilica.com/doc/606070/  [In Persian]. ##Salmani, B., & Rezazadeh, A. (2010). The Effect of Real Exchange Rate Volatility on Non-Oil Export in Iran, The Journal of Economic Studies and Policies, 7 (1), 37-38. Available at: http://economic.mofidu.ac.ir/article_26187.html?lang=en  [In Persian]. ##Taheri Fard, E. (2004). The role of exchange rates in the development of non-oil exports in the Iranian economy. Journal of Planning and Budgeting. (89), 47-79. Available at: http://jpbud.ir/browse.php?a_id=210&sid=1&slc_lang=fa&ppup=   [In Persian]. ##Tahmasebi, B., Jafari Samimi, A., & Farjadi, Gh. A. (2013). Investigation of the effect of non-oil exports on real exchange rates in Iran. Journal of financial Economics, 8(26), 53-76. Available at: http://ecj.iauctb.ac.ir/article_512784.html  [In Persian]. ##Takbiri, O., & Kordmadanloo, M. (2017). Investigating the Uncertain Impact of Real Currency Rate on Non-Oil Exports in Iran. Journal of Management Studies and Accounting, 3(1), 218-227. Available at: https://civilica.com/doc/705489/  [In Persian]. ##Tarigan, Y., Kindler, M., Elfira, E., & Silangit, Z. A. T. (2019). The Influence of Exchange Rate on Indonesian Export Value. In 1st International Conference on Applied Economics and Social Science (ICAESS 2019). Atlantis Press. ##Tavakoli, A., & Sayyah, M. (2010). The Impact Of Exchange Rate Fluctuations On Economic Activities In Iran. Journal of  Money and Economics, 2(4), 59-77. Available at: https://www.sid.ir/fa/journal/ViewPaper.aspx?id=147611  [In Persian].