The Effect of Export Promotion Policies on Major Macroeconomic Variables

Document Type : Original Article


1 Ph.D. Candidate in Economics, University of Isfahan

2 Associate Professor of Economics, University of Isfahan

3 Department of Economics, Faculty of Administrative and Economics Sciences, University of Isfahan

4 Associate Professor, Isfahan University, Department of Economics


Purpose of this article was to examine non oil export promotion policy in a developing Iran economy. We develop an open economy dynamic stochastic general equilibrium model (DSGE), which is log-linearized, calibrated, and estimated with Bayesian techniques using Iran macroeconomic data. The DSGE model also integrates one orthogonal structural shock a non oil export shock. The introduction of that structural shock allows for an empirical investigation of their effect and contributions to business cycle fluctuations in the Iranian economy. Simulating the DSGE model and decomposing the forecast error variances of the observable macroeconomic variables, it emerges that the main driving forces of the growth rates of real GDP, consumption, and investment, we decomposed the forecast error variances of observable macroeconomic variables simulated at various horizons that characterize the short run, medium run, and long run. Beyond, exogenous export shock remains the most important driven forces of the real GDP growth fluctuations. The shock, account for approximately 40 percent of its forecast error variance in explaining the real GDP growth fluctuations.


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