Exchange Rate Unification, the Equilibrium Real Exchange Rate, and Choice of Exchange Rate Regime: The Case of the Islamic Republic of Iran

January 1, 1999

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Exchange Rate Unification, the Equilibrium Real Exchange Rate, and Choice of Exchange Rate Regime: The Case of the Islamic Republic of Iran, (USA: International Monetary Fund, 1999) accessed November 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper reviews recent developments in the exchange system in the Islamic Republic of Iran and in the real effective exchange rate (REER). It also considers the determinants of the REER in connection with the choice of exchange regime after unification. The study illustrates how economic policy variables and exogenous shocks affect the real exchange rate primarily through the fiscal balance, and consequently, the savings-investment gap. It further illustrates that the appropriate level of REER and its medium-term path depend upon the mix of monetary, fiscal, and structural policies that underpin the evolution of inflation, balance of payments, and productivity growth.

Subject: Exchange rate arrangements, Exchange rates, Foreign exchange, Real effective exchange rates, Real exchange rates

Keywords: Current account, Debt service, Equilibrium exchange rate, Excess demand, Exchange rate arrangements, Exchange rate development, Exchange rate regime, Exchange rate system, Exchange rate unification, Exchange rates, Export rate, Floating exchange rate, Islamic Republic of Iran, Market rate, Nominal exchange rate, Rate of return, Real effective exchange rates, Real exchange rates, REER calculation, Term exchange rate regime, Terms of trade, Trading partner, U.S. dollar, WP

Publication Details

Pages:

41
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1999/015
Stock No:

WPIEA0151999
ISBN:

9781451843248
ISSN:

1018-5941

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