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:: Volume 6, Issue 2 (Winter 2012) ::
3 2012, 6(2): 51-68 Back to browse issues page
Exchange Rate Policy of Iran
Hossein Tavakolian , Ilnaz Ebrahimi
Monetary and Banking Research Institute (MBRI)
Abstract:   (1617 Views)

The exchange rate regime in Iran is practically fixed. The Central Bank of Iran (CBI) has committed itself to trying to bring about a particular exchange rate regime to meet two important targets: 1. Sustaining competitiveness of the economy, 2. Acquiring the share of foreign reserves in monetary base in a predetermined level. Since 2001 the share of foreign reserves in monetary base has increased, which suggests that the sensitivity of CBI toward its second target should have also increased. This study tries to test whether this hypothesis is statistically significant. A Markov Switching model is used to test this hypothesis. The results show that from 2001 the sensitivity of CBI toward its second target has increased significantly, while its sensitivity toward the first target has decreased.

JEL Classification: E52, E58, E61, E63

Keywords: exchange rate, foreign reserves, competitiveness, Markov switching
Full-Text [PDF 285 kb]   (1157 Downloads)    
Type of Study: Research | Subject: Monetary
Received: 2014/05/3 | Accepted: 2014/05/3 | Published: 2014/05/3
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Tavakolian H, Ebrahimi I. Exchange Rate Policy of Iran. 3. 2012; 6 (2) :51-68
URL: http://jme.mbri.ac.ir/article-1-71-en.html


Volume 6, Issue 2 (Winter 2012) Back to browse issues page
Journal of Money and Economy Journal of Money And Economy
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