Investigating the Interaction Effects of Exchange Rate Regimes and Inflation on Iran's Economic Growth

Document Type : Research Paper

Authors

1 Profosser of Economics, Universityof Tabriz, Tabriz, Iran

2 PhD in Economics, University of Tehran

3 Department of Economic Development / University of Tabriz

4 MSc Graduated, Economics, University of Tabriz, (Corresponding Author).

Abstract

Inflation in the Iran’s economy, by reducing the competitiveness of domestic economic enterprises against foreign competitors, has led to reduction in production and their exit from the business cycle and, weakening of the national economy as the result. In order to maintain the competitiveness of domestic enterprises, the policy of increasing the exchange rate or adjusting the exchange rate with inflation can be considered as the most important factor in this respect. The main purpose of this study is to investigate the interaction effects of the foreign exchange rate system and inflation on Iran's economic growth using the ARDL method for the period of 1360-1389. Experimental findings show that in Iran’s economy, the two variables of inflation and exchange rate flexibility have a direct negative effect on economic growth, but the interaction effects of the exchange rate systems and inflation on Iran's economic growth are positive.

Keywords

References

 
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History

  • Receive Date: 10 June 2022
  • Revise Date: 15 July 2022
  • Accept Date: 30 July 2022

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