The Effect of Exchange Rate Pass-Through on the Domestic Price of Iranian Vehicle Market With Emphasis On The Import Share of The Domestic Market Impact

Exchange rate has the fundamental role as one of the economy key variables in determining the domestic price. So it is important to know how is the empirical relationship between the exchange rate and domestic prices and the factors influencing this relationship.
The main objective of this study is to determine the effect of vehichel imports share on the exchange rate pass – through on domestic price of vehichels in Iran over period of 1361-1390.
For this purpose, the model of research has been estimated by using Johansen multivariate contigration technique. The estimation results indicate that there exist a long run relationship between the market share and the exchange rate pass – through, but the exchange rate pass – through is incomplete due to the share of forigen vehichel imports in domestic vehichels market. In other words, increasing the share of imports, reduces degree of exchange rate pass – through on domestic prices.