An Empirical Analysis of Imports of Iran: Are Imports, Exchange Rate and GDP Cointegrated?

Abstract

This paper investigates the effect of exchange rate and other variables such as world GDP, domestic GDP and Inflation on Iran’s Imports using cointegration method suggested by Gregory and Hansen. The empirical analysis indicates that there is a long run relationship between imports and these variables as they are cointegrated and there is an evidence of a structural shift during 1995. The empirical results indicate that the variables have expected signs. In view of these findings some policy suggestions have been made.