Long-run Trend and Determinants of Terms of Trade of Iran
This paper examines the trend and determinants of terms of trade of Iran. Using a Vector-Error Correction model (VECM), two models has been estimated for Iran's economy. Terms of trade in model I is the net barter terms of trade; and in model II is the ratio of export to import unit values. An...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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EconJournals
2017-05-01
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| Series: | International Journal of Economics and Financial Issues |
| Online Access: | http://mail.econjournals.com/index.php/ijefi/article/view/3654 |
| _version_ | 1828017829894422528 |
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| author | Saman Yousefvand Reza Najarzadeh Hasan Heidari Lotfali Agheli |
| author_facet | Saman Yousefvand Reza Najarzadeh Hasan Heidari Lotfali Agheli |
| author_sort | Saman Yousefvand |
| collection | DOAJ |
| description |
This paper examines the trend and determinants of terms of trade of Iran. Using a Vector-Error Correction model (VECM), two models has been estimated for Iran's economy. Terms of trade in model I is the net barter terms of trade; and in model II is the ratio of export to import unit values. Annual data of 1966-2012 and seasonal data of 1991-2011 have been used for respectively, model I and II. Four variables have been identified as main explanatory elements of variation in terms of trade over time; these variables are output, exchange rate, trade openness and oil prices. VEC model is used to capture the long-run interaction among variables. In first part of the article, the trend in terms of trade is evaluated to investigate whether there is a negative trend exists among TOT data as the Prebisch- Singer Hypothesis suggests there would be such a tendency in a commodity exporting country like Iran. Results show that there is not a significant decreasing trend in TOT data. VECM results show short-run causality from all variables to the terms of trade in. Also variables converged to their equilibrium levels. The correlation of the terms of trade is negative with exchange rate and positive with output, oil prices and trade openness in long-run.
Keywords: Terms of Trade, Unit Root Test, VECM model
JEL Classifications: F11; C8; C32
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| first_indexed | 2024-04-10T10:54:08Z |
| format | Article |
| id | doaj.art-43ab0dbfe42f46edbd8d7d2cb284424a |
| institution | Directory Open Access Journal |
| issn | 2146-4138 |
| language | English |
| last_indexed | 2024-04-10T10:54:08Z |
| publishDate | 2017-05-01 |
| publisher | EconJournals |
| record_format | Article |
| series | International Journal of Economics and Financial Issues |
| spelling | doaj.art-43ab0dbfe42f46edbd8d7d2cb284424a2023-02-15T16:20:02ZengEconJournalsInternational Journal of Economics and Financial Issues2146-41382017-05-0172Long-run Trend and Determinants of Terms of Trade of IranSaman Yousefvand0Reza NajarzadehHasan HeidariLotfali AgheliDepartment of Economics and Management, TarbiatModares University, Tehran, Iran; This paper examines the trend and determinants of terms of trade of Iran. Using a Vector-Error Correction model (VECM), two models has been estimated for Iran's economy. Terms of trade in model I is the net barter terms of trade; and in model II is the ratio of export to import unit values. Annual data of 1966-2012 and seasonal data of 1991-2011 have been used for respectively, model I and II. Four variables have been identified as main explanatory elements of variation in terms of trade over time; these variables are output, exchange rate, trade openness and oil prices. VEC model is used to capture the long-run interaction among variables. In first part of the article, the trend in terms of trade is evaluated to investigate whether there is a negative trend exists among TOT data as the Prebisch- Singer Hypothesis suggests there would be such a tendency in a commodity exporting country like Iran. Results show that there is not a significant decreasing trend in TOT data. VECM results show short-run causality from all variables to the terms of trade in. Also variables converged to their equilibrium levels. The correlation of the terms of trade is negative with exchange rate and positive with output, oil prices and trade openness in long-run. Keywords: Terms of Trade, Unit Root Test, VECM model JEL Classifications: F11; C8; C32 http://mail.econjournals.com/index.php/ijefi/article/view/3654 |
| spellingShingle | Saman Yousefvand Reza Najarzadeh Hasan Heidari Lotfali Agheli Long-run Trend and Determinants of Terms of Trade of Iran International Journal of Economics and Financial Issues |
| title | Long-run Trend and Determinants of Terms of Trade of Iran |
| title_full | Long-run Trend and Determinants of Terms of Trade of Iran |
| title_fullStr | Long-run Trend and Determinants of Terms of Trade of Iran |
| title_full_unstemmed | Long-run Trend and Determinants of Terms of Trade of Iran |
| title_short | Long-run Trend and Determinants of Terms of Trade of Iran |
| title_sort | long run trend and determinants of terms of trade of iran |
| url | http://mail.econjournals.com/index.php/ijefi/article/view/3654 |
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