Short-run and Long-run Effects of Exchange Rate on Balance of Payments

Subject Areas :

Narges Khaton Pirhadi Tavandashti ¹ (MA Student in Islamic Azad University South Tehran Branch)
Ali. Dehghni ² (Assistant Professor Islamic Azad University South Tehran Branch)
Fatemeh. Zandi ³ (Assistant Professor Islamic Azad University South Tehran Branch)

Received: 2015-09-23 Accepted : 2015-09-23 Published : 2014-09-23

Keywords: exchange rate, money supply, monetary approach to the balance of payments, inflation rate,

Abstract :

The monetary approach to the balance of payments in Iran has been considered in this research. For this purpose the model of time series, VAR and VECM are employed. Results indicated a two-way causality between money supply and inflation; exchange and inflation rates in short-run and long-run. However, the effects of national currency devaluation on export, current account and balance of payments are not verified authentically enough.