Investigating the Impact of the Effective Exchange Rate (through Foreign Exchange and Trade Policy Channels) on Exports of Iran's Petrochemical Industry (1971-2019)

This research has been conducted to investigate the effect of foreign exchange and trade policies on Iran's petrochemical exports during the years 1971 to 2019 and to provide necessary policy solutions in this field. In this study, the effective exchange rate of export approach, which is the official exchange rate adjusted by government subsidies paid to the export sector, has been used to assess the impact of foreign exchange and trade policies. Vector autoregressive with exogenous variables approach is used to estimate the model. Then, to study the impact of foreign exchange and trade policies, the effective exchange rate of the petrochemical exports has been considered in the petrochemical exports model. According to the results, foreign exchange and trade policies in the under-review period have been effective in strengthening petrochemical exports. Also, the other results indicate the lower impact of foreign exchange policies through the devaluation of money than the impact of trade policies through subsidies paid to exporters, on petrochemical exports; Another result is the negative effect of the relative difference between the unofficial exchange rate and the effective exchange rate of exports on the export of petrochemical products.