The Effect of Exchange Rate on the Economy of Trade-Based Cities of Iran's Economy (The Case of six coastal cities: Kish, Qeshm, Chabahar, Anzali, Arvand, Aras)

Economists believe that free trade with the export of domestic goods and the import of goods from abroad increases the welfare of the countries. Therefore, improving trade is one of the major economic goals of any country, and free zones are developed in line with the development of exports and imports, the acquisition of currency revenues, and the establishment of a systematic link between the national economy and the global economy. This research seeks to investigate the effect of exchange rate, as an effective variable on international trade, in the form of a J-curve on trade in trade-based cities of Iran. Therefore, this effect is estimated for the trade-based cities of Kish, Qeshm, Chabahar, Anzali, Arvand, and Aras during the 2005-2017 period, using a PANEL ARDL. The results indicate that the effect of the exchange rate on exports is not significant in the short term, but in the long run the effects is significant (58.02). This effect on imports is significant and 565.05 in the short term and 381.1 in the long term. Therefore, although the short-term and long-term effects of the exchange rate on exports, imports and the trade balance of these cities are positive, but the long run the effect of the exchange rate on exports and trade balance is stronger than its effect on the imports. So this evidence confirms the existence of a j-curve in Iran's trade-based cities in the long run. Thus, the realization of the exchange rate, in long term, can ultimately encourage the exports and reduce the dependence on the, and thus improve the trade balance of the cities. Therefore, the findings of this study can be a useful for economic decision makers and policy makers in managing coastal cities.