The Effect of Real Exchange Rate Volatility on Exports of Industrial Goods (Saikkonen & Lutkepohl Approach)

Iran’s share of world exports has not been great in recent years and the development of non-oil exports such as exports of industrial goods in order to reduce the economy''s dependence on oil revenues made necessary. The real exchange rate is one of the most important variables affecting exports. In this context، investigate the effect of the real exchange rate volatility on different variables such as the export is important. The main objective of this paper is to investigate the impact of real exchange rate volatility on exports of Iran Industrial goods over the period of 1968-2010. To that end، The real exchange rate volatility index has been estimated incorporating with EGARCH (0،1) model than we using co-integration of Saikkonen & Lutkepohl and FMOLS to investigate the impact of the real exchange rate volatility index، along with other variables of model exports of industrial goods have been evaluated. The main empirical finding of this paper show that the real exchange rate volatility variables and export prices have negative and significant effects on exports of industrial goods and variables GDP’s world، GDP’s Iran and trade of openness have positive and significant effects on exports of industrial goods. The empirical findings of this paper، The beneficial implications for investors and Policy makers needs to recognize the exact effects of exchange rate volatility on exports of industrial goods are provided.