The Asymmetric Impacts of Currency Shocks on Wood Imports and Wood Products in Iran with Emphasis on the Environment of Shock Formation

Wood and wood products are used as a productive input as well as the final consumer goods of households. Part of this need comes from imports. Imports depend mostly on exchange rate developments, and importers respond differently to negative and positive currency shocks depending on currency conditions. Given the importance of this issue, the present study examines the asymmetric effects of foreign exchange shocks on wood imports and wood products in Iran, with an emphasis on the environment of foreign exchange shocks. In this regard, the EGARCH approach over the period 1974-2017 was used to model the formation of shocks and the data panel regression approach over the period 1993-2017 was used to investigate the asymmetric effects of shocks on wood imports and its products. The results show that the effect of negative and positive shocks on the amount of wood imports and its products is asymmetric. Trade openness reflects the ease of trade between Iran and its trading partners. The turbulent environment has reduced the impact of positive currency shock and increased negative impact of currency shock on the amount of raw wood imports, types of paper, and paper as final goods. The positive currency shock of the turbulent formation environment strengthens the effects of the exchange rate transition on the amount of finished goods and paper pulp. Positive and negative shocks have an asymmetric effect on the exchange rate environment. The effect of positive shocks is greater than negative shocks.