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The Decline of the Iranian Rial During the Post Revolutionary Period: A Productivity Approach

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  • Mohsen Bahmani-Oskooee

    (Graduate Program in Economics, The University of Wisconsin-Milwaukee)

Abstract

Since the advent of revolution in Iran, the Iranian rial has lost its nominal and real values by more than 40 times. What could explain this decline? In this paper, I identify the decline in relative productivity between Iran and her seven major trading partners as the major cause of the decline in the real rial. Engle-Granger cointegration and error-correction modeling along with Johansen-Juselius cointegration technique are used to establish the long-run relation between real exchange rates (seven) and differential productivity. Additionally, the empirical methodologies are supplemented with a graphic exposition to add more intuition to the analysis. Finally, several policy recommendations are outlined.

Suggested Citation

  • Mohsen Bahmani-Oskooee, 1996. "The Decline of the Iranian Rial During the Post Revolutionary Period: A Productivity Approach," Working Papers 9615, Economic Research Forum, revised 05 1996.
    • Handle: RePEc:erg:wpaper:9615
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    1. repec:vuw:vuwecf:16724 is not listed on IDEAS
    2. Shaar, Karam & Khaled, Mohammed, 2017. "Why you should use high frequency data to test the impact of exchange rate on trade," Working Paper Series 20137, Victoria University of Wellington, School of Economics and Finance.
    3. Karam Shaar & Mohammed Khaled, 2018. "Why you should use high frequency data to test the impact of exchange rate on trade," Applied Economics Letters, Taylor & Francis Journals, vol. 25(18), pages 1292-1295, October.
    4. Shaar, Karam, 2019. "Essays on modern economic issues in international trade, exchange rates and housing," Working Paper Series 8039, Victoria University of Wellington, School of Economics and Finance.
    5. Abbas Valadkhani & Majid Nameni, 2011. "How can Iran's black market exchange rate be managed?," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 38(2), pages 186-202, May.

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