The Assessment of Iran's Exchange Rate Arrangements in the Framework of Resistive Economy (DSGE Approach)

Hence, the main aim of this paper is to suggest the optimal exchange rate arrangement with targets of resistive economy in Iran. For achieving this, we used the DSGE approach. In this model, economic agents such as households, firms, government, monetary authorities and foreign sector have been considered. The empirical model have been investigated in three exchange rate scenarios such as pegged exchange rate, free or independent floating and managed floating exchange rate arrangements in Iran by using of DYNARE platform and MATLAB software. The main findings of model evaluation showed that the free floating or independent floating exchange rate arrangement has more resilient in comparison with pegged and managed floating exchange rate arranements. So, this arrangement has more comparability with resistive economy indices in Iran. Moreover, if the preference of consumption to the domestic commodities has increases, the performance of free floating exchange rate arrangement will increase. By the empirical findings of this study, we can argued that the central bank and monetary authorities adopt the free floating exchange rate system and modify the consumption pattern with emphasis on prefence to consumption of domestic products.