Determinants of the Parallel Market Premium, Real Exchange Rate and Price Level in Iran
The purpose of this paper is to find out simultaneously the determinants of the parallel market premium, real exchange rate and price level by using a macroeconomic model. Using the 3SLS regression technique, the paper shows that money, expected inflation rate, net return of foreign exchange, invest...
| Main Authors: | , |
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| Format: | Article |
| Language: | fas |
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Allameh Tabataba'i University Press
2004-03-01
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| Series: | فصلنامه پژوهشهای اقتصادی ایران |
| Subjects: | |
| Online Access: | https://ijer.atu.ac.ir/article_3877_4471f37edb3046fe45955681e5ef2da8.pdf |
| _version_ | 1797369449236398080 |
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| author | Kazem Yavari Hossein Ghaderi |
| author_facet | Kazem Yavari Hossein Ghaderi |
| author_sort | Kazem Yavari |
| collection | DOAJ |
| description | The purpose of this paper is to find out simultaneously the determinants of the parallel market premium, real exchange rate and price level by using a macroeconomic model. Using the 3SLS regression technique, the paper shows that money, expected inflation rate, net return of foreign exchange, investment, public budget and oil revenues have significant effects on the parallel market premium, real exchange rate and price level. Our simulation results show that devaluation of domestic currency raises prices. It also lowers the premium in the short run but not it the long run. The nominal devaluation leads to real devaluation in the first year but will cause the real exchange rate to be overvalued at the end. This policy will also lower output and raise domestic currency denominated oil revenues and official foreign reserves. An important implication of the empirical results of the paper is that government has to maintain discipline in fiscal and monetary policy to be able to stabilize the parallel market premium, real exchange rate and prices. |
| first_indexed | 2024-03-08T17:47:03Z |
| format | Article |
| id | doaj.art-6bfd540ca8894253a5a8cf8a3d052639 |
| institution | Directory Open Access Journal |
| issn | 1726-0728 2476-6445 |
| language | fas |
| last_indexed | 2024-03-08T17:47:03Z |
| publishDate | 2004-03-01 |
| publisher | Allameh Tabataba'i University Press |
| record_format | Article |
| series | فصلنامه پژوهشهای اقتصادی ایران |
| spelling | doaj.art-6bfd540ca8894253a5a8cf8a3d0526392024-01-02T10:27:36ZfasAllameh Tabataba'i University Pressفصلنامه پژوهشهای اقتصادی ایران1726-07282476-64452004-03-016181111403877Determinants of the Parallel Market Premium, Real Exchange Rate and Price Level in IranKazem Yavari0Hossein Ghaderi1Assistant Professor in Economics, Tarbiat Modarres UniversityPh.D. Student in Economics, Tarbiat Modarres UniversityThe purpose of this paper is to find out simultaneously the determinants of the parallel market premium, real exchange rate and price level by using a macroeconomic model. Using the 3SLS regression technique, the paper shows that money, expected inflation rate, net return of foreign exchange, investment, public budget and oil revenues have significant effects on the parallel market premium, real exchange rate and price level. Our simulation results show that devaluation of domestic currency raises prices. It also lowers the premium in the short run but not it the long run. The nominal devaluation leads to real devaluation in the first year but will cause the real exchange rate to be overvalued at the end. This policy will also lower output and raise domestic currency denominated oil revenues and official foreign reserves. An important implication of the empirical results of the paper is that government has to maintain discipline in fiscal and monetary policy to be able to stabilize the parallel market premium, real exchange rate and prices.https://ijer.atu.ac.ir/article_3877_4471f37edb3046fe45955681e5ef2da8.pdfparallel market premiumreal exchange ratepricesexchange rate policies |
| spellingShingle | Kazem Yavari Hossein Ghaderi Determinants of the Parallel Market Premium, Real Exchange Rate and Price Level in Iran فصلنامه پژوهشهای اقتصادی ایران parallel market premium real exchange rate prices exchange rate policies |
| title | Determinants of the Parallel Market Premium, Real Exchange Rate and Price Level in Iran |
| title_full | Determinants of the Parallel Market Premium, Real Exchange Rate and Price Level in Iran |
| title_fullStr | Determinants of the Parallel Market Premium, Real Exchange Rate and Price Level in Iran |
| title_full_unstemmed | Determinants of the Parallel Market Premium, Real Exchange Rate and Price Level in Iran |
| title_short | Determinants of the Parallel Market Premium, Real Exchange Rate and Price Level in Iran |
| title_sort | determinants of the parallel market premium real exchange rate and price level in iran |
| topic | parallel market premium real exchange rate prices exchange rate policies |
| url | https://ijer.atu.ac.ir/article_3877_4471f37edb3046fe45955681e5ef2da8.pdf |
| work_keys_str_mv | AT kazemyavari determinantsoftheparallelmarketpremiumrealexchangerateandpriceleveliniran AT hosseinghaderi determinantsoftheparallelmarketpremiumrealexchangerateandpriceleveliniran |