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Effects of Exchange Rate Unification on Macroeconomic Variables in Emerging Market Countries: Difference-in-Differences Approach (in Persian)

Author

Listed:
  • Yazdani, Mehdi

    (Iran)

  • Mohammadi, Mahnaaz

    (Shahid Beheshti University)

Abstract

The exchange rates unification policy as an announced policy by policymakers and monetary authorities can have important effects on the macroeconomic variables of the Iranian economy and intensify the conditions of the stagflation. By considering the experience of other emerging countries for exchange rates unification policy in this study, the effects of this policy will be evaluated on macroeconomic variables, including economic growth, inflation, and unemployment, using panel data during the period 1984-2014. For this purpose, the difference in differences approach is used to estimate the effects of this policy on the mentioned macroeconomic variables. According to the results, the exchange rate unification policy can leads to increasing economic growth and inflation in both treatment and control groups during the selected period but had no significant effect on the unemployment rate. Also, the policy leads to increasing economic growth, reducing inflation and unemployment in the treatment group compared to the control group. However, the role of macroeconomic conditions and the economic environment have been important.

Suggested Citation

  • Yazdani, Mehdi & Mohammadi, Mahnaaz, 2017. "Effects of Exchange Rate Unification on Macroeconomic Variables in Emerging Market Countries: Difference-in-Differences Approach (in Persian)," Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 10(32), pages 173-198, July.
    • Handle: RePEc:mbr:jmbres:v:10:y:2017:i:32:p:173-198
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    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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