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Is monetary discipline a precondition for the effectiveness of Iran's export promotion policies?
Author(s) -
Molana H.,
Mozayani A. H.
Publication year - 2006
Publication title -
journal of international development
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.533
H-Index - 66
eISSN - 1099-1328
pISSN - 0954-1748
DOI - 10.1002/jid.1222
Subject(s) - economics , liberian dollar , incentive , black market , promotion (chess) , monetary economics , exchange rate , international economics , government (linguistics) , monetary policy , money supply , currency , precondition , finance , market economy , linguistics , philosophy , politics , political science , computer science , law , programming language
In the last decade, Iranian authorities have implemented a number of trade reforms and export stimulating policies. They have also tried to stabilize the dollar exchange rate and eliminate the black market premium. These policies have had little, if any, lasting favourable effect on non‐oil exports. One conjecture may be based on the inconsistency of their monetary policy: as money supply is used independently—without any regard for trade reforms and export promoting policies—to accommodate government's fiscal needs, its inflationary consequences undermine export incentives. We use 1982:Q1‐2000:Q2 data to estimate the response of exports to a one‐off rise in money supply and find that the results support the above conjecture. Copyright © 2005 John Wiley & Sons, Ltd.