Impacts of Exchange Rate Deviation on Agricultural Exports

Exchange rate is of the most important factors affecting export, such that determining it in an acceptable and efficient level in countries like Iran is highly important since they attempt to expand non-oil exports such as agricultural exports. Regarding the above mentioned issue, this study aims to investigate the impact of exchange rate deviation on Iranian agricultural exports. To get the objective, the data set for 1973-2008 as well as ARDL model were used. According to the results obtained from specification of real exchange rate equation, we found government expenditure, term of trade and oil-agriculture output gap as factors influencing exchange rate negatively. Furthermore, equilibrium real exchange rate showed a significant deviation compared to its long-term path. Also, results obtained from agricultural exports supply revealed that equilibrium real exchange rate deviation from its long-term path, affects agriculture exports negatively in short and long-term.

JEL Classification: F31, Q17, E6

Keywords:
Exchange Rate Deviation, Equilibrium Exchange Rate, Agricultural Exports, Iran