Trade and Exchange Rate Policies and their Effects on Agricultural Sector in Iran (1963-2001)

The present research was conducted to survey the effect of exchange rate policies through devaluation compared with the effect of trade policies through the paid subsidy to exporters on the agricultural export. In another part of this research, the relationship between effective exchange rate (EERX) and agricultural export is estimated. EERX is the adjusted official exchange rate through paid subsidies to the exporters by the government. Our estimation shows that effect of devaluation exceeds that of subsidy policy. Based on findings, EERX has a significant effect on agricultural export. The percent increase in the EERX causes the 2.9 percent increase the agricultural export in the long term.