IDEAS home Printed from
   My bibliography  Save this article

Investigation of the Factors Affecting Real Exchange Rate in Iran


  • Mostafa Goudarzi

    (Department of Agricultural Economics, Qaemshahr Branch, Islamic Azad University, Qaemshahr, Iran)

  • Komeil Khanarinejad

    () (.Sc. Student, Department of Agricultural Economics, Qaemshahr Branch, Islamic Azad University, Qaemshahr, Iran)

  • Zahra Ardakani

    (Department of Agricultural Economics, Qaemshahr Branch, Islamic Azad University)


This paper intends to investigate the factors affecting the real exchange rate in Iran in the period of 1978-2008. In this part, the econometric methodology and vector autoregressive model that is known as VAR is used to investigate the effect of proper variables on the real exchange rate. The results of Johansson-Jousilious test confirmed co-integration between variables, and thus long-run equilibrium relationship was confirmed among proper variables. Overall, the impulse and response functions showed that the shocking of variables, oil price and volume of money flows, has a positive impact on the real exchange rate and put it above its permanent level in the whole period of study. The results of variance decomposition showed that the most effects belonged to oil price and then volume of money flow that in fact represents greater relative importance of these variables in comparison with other variables among all model variables.

Suggested Citation

  • Mostafa Goudarzi & Komeil Khanarinejad & Zahra Ardakani, 2012. "Investigation of the Factors Affecting Real Exchange Rate in Iran," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 15(44), pages 37-54, June.
  • Handle: RePEc:rej:journl:v:15:y:2012:i:44:p:37-54

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Galindo, Arturo & Schiantarelli, Fabio & Weiss, Andrew, 2007. "Does financial liberalization improve the allocation of investment?: Micro-evidence from developing countries," Journal of Development Economics, Elsevier, vol. 83(2), pages 562-587, July.
    2. Kapur, Basant K, 1976. "Alternative Stabilization Policies for Less-developed Economies," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 777-795, August.
    3. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
    4. Thornton, John & Poudyal, Sri Ram, 1990. "Money and Capital in Economic Development: A Test of the McKinnon Hypothesis for Nepal," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 22(3), pages 395-399, August.
    5. Donald J. Mathieson, 1979. "Financial Reform and Capital Flows in a Developing Economy (Réforme financière et flux de capitaux dans une économie en développement) (La reforma financiera y los flujos de capital en una economÃ," IMF Staff Papers, Palgrave Macmillan, vol. 26(3), pages 450-489, September.
    6. King, Robert G. & Levine, Ross, 1993. "Finance, entrepreneurship and growth: Theory and evidence," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 513-542, December.
    7. Fry, Maxwell J, 1978. "Money and Capital or Financial Deepening in Economic Development?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 10(4), pages 464-475, November.
    8. Mathieson, Donald J., 1980. "Financial reform and stabilization policy in a developing economy," Journal of Development Economics, Elsevier, vol. 7(3), pages 359-395, September.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Real exchange rate; VAR model; Johansson test; Impulse response functions; Variance decomposition;

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rej:journl:v:15:y:2012:i:44:p:37-54. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Radu Lupu). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.