A Survey on Long-Term Relationship Between Exchange Rate and Non-Oil Exports in Iran

Two different functions for Non-oil export demand and supply is estimated in this article by using co integration technique during the period 1976-2009. Results show that there is a long-term relationship between gross domestic production، Real effective exchange rate، and Non-oil export in both supply and demand sides of Iranian economy. The results of estimating export demand function that include GDP of Iran trade partners، real effective exchange rate، and dummy variable for Iran-Iraq war verify that demand elasticity for real effective exchange rate is 0. 303 and income elasticity becomes 2. 049. These results reveal that real effective exchange rate have not significant role in Non-oil demand function. On the other hand، estimated real effective exchange rate and GDP coefficients in export supply function of I. R. of Iran are 0. 055 and 1. 031، respectively.