The Effect of Real Exchange Rate on Iranian Non-Oil Exports

The need to pay attention to the exchange rate as one of the key issues of macroeconomic policy in the economic literature of any country is essential. The exchange rate represents the value of each country's currency and reflects the relationship between the domestic economy and the outside world, so proper regulation of the exchange rate, considering its changes and the factors influencing it in any circumstances can be a subject for discussion. On the other hand, increasing non-oil exports has been the main economic policy of the Iranian government in recent decades. To get rid of the single-product economy, the development of non-oil exports is an indispensable necessity for the Iranian government. In this study, using the appropriate model, the econometric method of VECM is used to investigate the short and long term effects of real exchange rate on Iranian non-oil exports during 1978-2008. This model uses productivity as a non-price factor alongside price factors and the results show that in this time interval, the effect of real exchange rate, world income, GDP, exchange rate and labor productivity (in the sector Non-oil) has been positive on non-oil exports

Keywords: Real Exchange Rate, Non-Oil Exports, Global Income, GDP, Exchange Relationship, Productivity.