Investigating Effect of Exchange Rate Volatility on Export and Value Added of Iranian Food Industries (Application of Structural Vector Autoregression Model)

The sub-branch of food industry is one of the most profitable ways communication between two sectors of industry and agriculture and also prerequisite for an industrialization strategy and providing food security in country. The present study tries to examine effect of exchange rate volatility on Iran's food Industries exports and value added by framework SVAR at period of 1972-2015. The examined variables include of food Industries exports, exchange rate volatility, value added, inflation rate, and Iran's trade-offs. The results showed that short-run effects of trade-offs and inflation rate variables are negatively correlated and value-added and exchange rate volatility variables are positively correlated to food exports. On the other hand, long-run results between variables showed that all variables in the long-run have positive relationships with food Industries exports. According to the results, it is suggested that government put in place control of inflation and improvement of short-run exchange relationship. Also, the results indicate that exchange rate volatility increase export volume in short-run (beginning of period) and in following periods cause exporters activities to become less active than importers activities and reduce export volume of food industry.Therefore, due to direct and positive long-run exchange rate volatility effects on food exports and role of these industries in development and value added, development of food exports products with a focus on expansion of these industries and use of conversion and complementary industries with agricultural products to increase shelf life of products is suggested. Also, since exchange rate volatility increases food exports only in a short-run in first period, it is sujested to invesigate the risks of food-related activities and lack of price stability and market regulation for the future studies.