Document Type: Review Paper

Authors

1 Department of Economics, School of Management and Economics, Science and Research Branch, Islamic Azad University (IAU), Tehran, Iran

2 Department of Business Management, School of Management and Economics, Science and Research Branch, Islamic Azad University (IAU), Tehran, Iran

Abstract

This paper investigates the effect of exchange rate uncertainty on the Iran’s import trade. The exchange rate ‎uncertainty series were generated utilizing the TARCH model. This model analyzes the asymmetric effects. The analysis of uncertainty and asymmetry ‎of the exchange rate shows significant TARCH ‎effect on Iran’s exchange rates‎. The findings of the study indicate negative shocks (bad news) had greater impact on volatility during the period. In the next stage imports demand function is estimated. There was a long run relationship among, real import ‎demand, real national income, real exchange rate and uncertainty of real exchange rate. Results show significant ‎and negative impact of exchange rate uncertainty on Iran’s imports, and import demand is positively affected by ‎real national income. Furthermore significant and negative impact of real exchange rate on Iran’s real imports is ‎found.‎

Keywords