The Impact of Macroeconomic Indicators on Agricultural Trade Balance of Iran

Abstract

Problem statement: One of the main targets of Iran's economic development plans in agricultural sector during the recent years was to augment agricultural exports and establish a positive trade balance in this sector. In this research the impact of macroeconomic indicators of Iran and its 20 trading partners on Iran's agricultural trade balance had been investigated. Approach: The ARDL approach was applied during the period of . Results: The domestic real income had the highest effect on the agricultural trade balance relative to other indicators both in the short-and longrun period. On the other hand, domestic money supply and foreign real income had the lowest effect in long-run and short-run respectively. In addition, real exchange rate had the positive impact on trade balance indicating that the depreciation will improve trade balance. But this is not a robust political instrument for establishing long-run equilibrium. Finally, the ECM results implied the fairly high speed of adjustment to equilibrium. Conclusion: The policies that tend to increase domestic income should be planned in such a way that the increased purchasing power of people will be directed to domestic goods rather than foreign goods.

Assessing exchange rate sensitivity of bilateral agricultural trade for the Visegrad countries

“…These results are similar to other studies concerning the J-curve issue in agricultural trade which did not confirm the tested pattern but indicate a long-run positive effect of currency depreciation on the agricultural trade balance (e.g. Baek et al, 2009;Gong and Kinnucan, 2015;Yazdani and Shajari, 2009).…”

“…The autoregressive distributed lag (ARDL) approach was applied from 1960 to 2005. Yazdani and Shajari (2009) found out that real exchange rate had a positive impact on the trade balance, indicating that depreciation improves the trade balance. Baek et al (2009) analysed the dynamic effects of changes in exchange rate on bilateral trade of agricultural products between the United States and its 15 major trading partners, by applying the ARDL model of the error correction version.…”

“…The empirical results indicated that the J-curve does not exist in the Nigerian agricultural sector in the long run since the pattern of lag between the exchange rate depreciation and the trade balance resembled more of an asymmetric S-shape in a horizontal alignment. Yazdani and Shajari (2009) reported on the impact of macroeconomic indicators for Iran and its 20 trading partners and its agricultural trade balance. The autoregressive distributed lag (ARDL) approach was applied from 1960 to 2005.…”

“…The autoregressive distributed lag (ARDL) approach was applied from 1960 to 2005. Yazdani and Shajari (2009) found out that real exchange rate had a positive impact on the trade balance, indicating that depreciation improves the trade balance.…”

An Appraisal of Foreign Exchange Resources Generation and Management

“…Keynessian models of the adjustment mechanism which are characterized by the adjustment of the output suggest that for a given reduction in export earning, the cost of not having reserve and the demand for reserve is inversely proportional to the relative size of the foreign trade sector. Explaining further CBN Omolayo Gurbuz and Aybars (2010); Gan et al (2004) and Yazdani and Shaari (2009) said that since the keynessian revolution, there has been a movement from the automatic approach to the balance of payments described above to the policy problem approach which accepts the facts of continuing disequilibrium and then goes on to look into the policy objectives that must be adopted. Abstracting from autonomous capital movements, the new policy approach (called the absorption approach defines Balance of payment (B) as the difference between total output (y) and total domestic Expenditure (E) i.e., B = Y-E whereas the traditional approach views balance of payments as the difference between Receipt (RF) and Payments to Foreigners (PF), i.e., B = RF-PF.…”