A Study on Instability in Agricultural Exports in Iran with Markov Switching Approach

High degree of instability in exports of primary goods, can lead to negative effect on economic growth in developing countries. Any instability in the foreign exchange revenues will cause uncertainty in economic development planning. To measure the agricultural trade volatility, hodrick–prescott filter and the Markov switching model in two regimes were used for the period of 1981- 2011. Our findings indicate that in 14 years increasing and in 17 years declining has been take place in agricultural export activities. The years of declining were longer than years of increasing. Increasing periods have more steepness than declining periods. Thus, during the study period, the agricultural sector has been more declining volatility in exports, resulting in vulnerability of non-oil exports. This effect also exist in the agriculture.