The Supply of non-oil Export in Iran: Applying Kalman Filter Approach

This paper adopts Kalman filter approach to investigate factors affecting the supply of Iran’s non-oil exports during the period 1981-2011. This approach examines the structural instability in the coefficients of the models and allows for parameters change over time. In view of the structure of Iran’s non-oil exports، the empirical results imply that the elasticity of Iran’s non-oil exports supply to domestic product، price and exchange rate during the war years were very unstable. With the end of the war and the relative stability of the economy، the elasticities show little fluctuations. In sum، the elasticity of Iran’s non-oil exports supply to domestic product، and exchange rate were positive، however the elasticity of Iran’s non-oil exports supply to price was negative. This means that increasing in domestic product and exchange rate has positive impact on the Iran’s non-oil exports supply. On the other hand، inflation influences negatively the Iran’s non-oil exports supply.