Survey of the Linder Theory in BRICS Countries applying different Exchange Rate Arrangements (GMM system)

The purpose of this research is to investigate the Linder theory in BRICS countries applying different exchange rate arrangements. Using the Generalized Gravity Model and a Two-Step Method of Moments، Generalized System of (GMM)، 5 countries have been selected for the period of 2001-2013 for this study. Common unit root tests for dynamic panel data، Sargan and serial correlation (M2) were applied in order to evaluate stationary of variables، no correlation between the instruments and stochastic terms and limits of generalized moments. The results showed that using free floating exchange rate arrangement had no significant effects on bilateral trade in selected countries. Managed floating exchange rate arrangement had significan and negative effects while pegged and crawling pegged had positive effects on bilateral trade. The Linder hypothesis was significant and confirmed by applying different exchange rate arrangements in regional trade cooperation.