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Exchange Rate Unification, the Equilibrium Real Exchange Rate, and Choice of Exchange Rate Regime: The Case of the Islamic Republic of Iran

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  • International Monetary Fund

Abstract

This paper reviews recent developments in the exchange system in the Islamic Republic of Iran and in the real effective exchange rate (REER). It also considers the determinants of the REER in connection with the choice of exchange regime after unification. The study illustrates how economic policy variables and exogenous shocks affect the real exchange rate primarily through the fiscal balance, and consequently, the savings-investment gap. It further illustrates that the appropriate level of REER and its medium-term path depend upon the mix of monetary, fiscal, and structural policies that underpin the evolution of inflation, balance of payments, and productivity growth.

Suggested Citation

  • International Monetary Fund, 1999. "Exchange Rate Unification, the Equilibrium Real Exchange Rate, and Choice of Exchange Rate Regime: The Case of the Islamic Republic of Iran," IMF Working Papers 1999/015, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1999/015
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    Citations

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    Cited by:

    1. Marie-Ange VEGANZONES-VAROUDAKIS & NABLI, 2002. "Exchange Rate Regime and Competitiveness of Manufactured Exports: The case of MENA Countries," Working Papers 200230, CERDI.
    2. Waheed IBRAHIM, 2016. "Econometric analysis of determinants of real effective exchange rate in Nigeria (1960-2015)," Timisoara Journal of Economics and Business, West University of Timisoara, Romania, Faculty of Economics and Business Administration, vol. 9(1), pages 62-80, June.
    3. Mr. Mangal Goswami & Oya Celasun, 2002. "An Analysis of Money Demand and Inflation in the Islamic Republic of Iran," IMF Working Papers 2002/205, International Monetary Fund.
    4. Hossein Tavakolian & Hamed Ghiaie, 2019. "Optimal Inflation Targeting in a Dual-Exchange Rate Oil Economy," THEMA Working Papers 2019-09, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    5. Oya Celasun, 2003. "Exchange Rate Regime Considerations in an Oil Economy: The Case of the Islamic Republic of Iran," IMF Working Papers 2003/026, International Monetary Fund.
    6. ibrahim, waheed & Jimoh, Ayodele, 2012. "Real Exchange Rate and Real Effective Exchange Rate Measurement: Some theoretical Extensions," MPRA Paper 59428, University Library of Munich, Germany, revised 2013.
    7. Tavakolian , Hossein & Ebrahimi , Ilnaz, 2012. "Exchange Rate Policy of Iran," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 6(2), pages 51-68, December.
    8. International Monetary Fund, 2004. "Islamic Republic of Iran: Selected Issues Paper," IMF Staff Country Reports 2004/308, International Monetary Fund.

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