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The Impacts of Unified Exchange Rate System on Domestic Price in Iran

Author

Listed:
  • Ali Reza Kazerooni

    (Associate Professor, Economics Department, University of Tabriz)

  • Majid Feshari

    (Ph.D. Student of Economics, University of Tabriz)

Abstract

The main purpose of this paper is to examine the impact of exchange rate unification policies on the domestic price in Iran using a co-integration approach between 1971and 2002. For doing this, a weighted average of exchange rate under the multiple exchange rate regimes is used as a proxy for the unified exchange rate. The impact of this unified exchange rate on the domestic price alongside with other variables is evaluated by multivariate Johansen’s co-integration technique. The main finding indicates that the unified exchange rate has a positive effect on the domestic price in Iran. In other words, the move from multiple exchange rate system to unified exchange rate maybe accompanied with inflationary pressure.

Suggested Citation

  • Ali Reza Kazerooni & Majid Feshari, 2009. "The Impacts of Unified Exchange Rate System on Domestic Price in Iran," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 14(2), pages 71-96, fall.
    • Handle: RePEc:eut:journl:v:14:y:2009:i:2:p:71
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    References listed on IDEAS

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    1. Eatzaz Ahmad & Saima Ahmed Ali, 1999. "Exchange Rate and Inflation Dynamics," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 38(3), pages 235-251.
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