An Investigation into the Threshold Effect of the Exchange Rate on Inflation of Non-oil Export Goods in Iran

Document Type : Original Article


1 Ph.D. Candidate in Economics, International Campus of Ferdowsi University of Mashhad, Mashhad, Iran

2 Assistant Professor of Economics, Faculty of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad, Iran,

3 Assistant Professor of Economics, Faculty of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad, Iran



Non-oil exports are one of the important components of the Iran’s export. In this regard, currency depreciation is one of the ways to achieve the higher level of non-oil exports. The purpose of the present study is to provide a new insight into the way the exchange rate influences the inflation of non-oil exports prices. For this purpose, a threshold vector autoregression model was used to study the non-linear issue of exchange rate fluctuation in 1376:2-1395:4. According to the results of the research, the exchange rate shocks is associated with a positive response to the inflation rate of non-oil exports goods. Nevertheless, the impact of the shock before and after the 0.8% seasonal inflation is different. So if inflation of exported goods exceeds the threshold, it will have a more positive reaction to the exchange rate shock. This result can be attributed to the dependence of the production of Exported goods on imported intermediate goods. Accordingly, creating international competitiveness of non-oil exports with currency depreciation cannot be expected.


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