The Effect of Exchange Rate Volatility on the None-Oil Exports of Iran to Major Trade Partners

The Main purpose of this study is to investigate the effect of real exchange rate volatility on Iran none oil exports to major trade partners by using quarterly data in the period of 2001:1-2014:4. For this reason, real exchange rate volatility is calculated by Generalized Auto Regressive Conditional Heteroskedasticity (GARCH) model. Then, real exchange rate volatility effect on Iran none oil export is estimated based on gravity model and by Feasible Generalized Least Squares (FGLS) method. On the overal results indicate that, gross domestic production of Iran, gross domestic production of major trade partners has significant positive effect, on the other hand geographical distance between Iran and major trade partners, Linder variable and real exchange rate volatility has significant negative effect on Iran none oil exports to major trade partners. Therefore as expected increasing in real exchange rate volatility will decrease Iran none oil exports of Iran to Major Trade Partners.