Identification of Agricultural Trade Flows in Iran

This research investigates trade flows of agricultural sector in Iran over the period 1976-2004. The long run relationships among agricultural import and export volume with their determinants are estimated using a new co-integration test which is called "Bounds Test "procedure. The results indicate that there is an equilibrium relationship between agricultural import and export and their determinants in the long run.Agricultural import and export demand functions are estimated using ARDL approach. The estimated long run income, price and exchange rate elasticities are respectively 0.21, -0.95 and -0.14 in import demand function and 1.15, -0.92 and -0.11 in export demand function.With regards to Marshall – Lerner condition, since sum of price elasticities in agricultural import and export demand functions is larger than unit therefore depreciation could improve the trade balance in agricultural sector.