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Is monetary discipline a precondition for the effectiveness of Iran's export promotion policies?

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  • H. Molana

    (University of Dundee, UK)

  • A. H. Mozayani

    (Tarbiat-Modares University, Iran)

Abstract

In the last decade, Iranian authorities have implemented a number of trade reforms and export stimulating policies. They have also tried to stabilize the dollar exchange rate and eliminate the black market premium. These policies have had little, if any, lasting favourable effect on non-oil exports. One conjecture may be based on the inconsistency of their monetary policy: as money supply is used independently-without any regard for trade reforms and export promoting policies-to accommodate government's fiscal needs, its inflationary consequences undermine export incentives. We use 1982:Q1-2000:Q2 data to estimate the response of exports to a one-off rise in money supply and find that the results support the above conjecture. Copyright © 2005 John Wiley & Sons, Ltd.

Suggested Citation

  • H. Molana & A. H. Mozayani, 2006. "Is monetary discipline a precondition for the effectiveness of Iran's export promotion policies?," Journal of International Development, John Wiley & Sons, Ltd., vol. 18(3), pages 319-330.
  • Handle: RePEc:wly:jintdv:v:18:y:2006:i:3:p:319-330 DOI: 10.1002/jid.1222
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    1. Faini, Riccardo, 1994. "Export supply, capacity and relative prices," Journal of Development Economics, Elsevier, pages 81-100.
    2. Jai S. Mah, 2003. "The Export Insurance System and Export Supply of Britain," Working papers 2003-44, University of Connecticut, Department of Economics.
    3. Barlow, Robin & Senses, Fikret, 1995. "The Turkish export boom: Just reward or just lucky?," Journal of Development Economics, Elsevier, pages 111-133.
    4. Stephen Redding & Anthony Venables, 2004. "Geography and Export Performance: External Market Access and Internal Supply Capacity," NBER Chapters,in: Challenges to Globalization: Analyzing the Economics, pages 95-130 National Bureau of Economic Research, Inc.
    5. Miles, Marc A, 1979. "The Effects of Devaluation on the Trade Balance and the Balance of Payments: Some New Results," Journal of Political Economy, University of Chicago Press, vol. 87(3), pages 600-620, June.
    6. Goldstein, Morris & Khan, Mohsin S, 1978. "The Supply and Demand for Exports: A Simultaneous Approach," The Review of Economics and Statistics, MIT Press, vol. 60(2), pages 275-286, May.
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