چکیده:
In order to investigate the effect of the devaluation of the national currency on the net export of Iran's economy, the two-stage least squares method was used, considering Iran's special conditions, in the generalized Marshall Lerner conditional equation. The results show simple Marshall Lerner condition is not appropriate for examining the effects of exchange rate variation on the trade balance of the Iranian economy due to its assumptions. This condition, only, consider the demand for exports and imports. Since about 85% of Iran's imports include intermediate and capital goods, the effect of the exchange rate directly affects the cost of output and this has significant effects on the prices and elasticities of export goods. Therefore, it is necessary to amend this condition according to the specific conditions of the Iranian economy. In this paper, the extension Marshall Lerner condition in Iran for the period of 1981-2020 has been estimated. The results show that this condition is not met for Iran's economy. Therefore, the policy of devaluation of the national currency does not have a significant effect on the improvement of the country's trade balance, and the economic policy maker should consider other solutions to increase exports. The policy makers must find an alternative solution to increase exports. For example, consider export diversification to improve export performance.
خلاصه ماشینی:
Investigating the effects of exchange rate changes on the trade balance: A generalized Marshall-Lerner condition approach in accordance with the conditions of the Iranian economy Hossein Samsami * Zeinab Orooji **, Sahar Dashtban *** 1 Abstract In order to investigate the effect of national currency devaluation on the net exports of the Iranian economy, the two-stage least squares method was used, taking into account the specific conditions of Iran in the generalized Marshall-Lerner condition equation.
The Marshall-Lerner condition, relying on the market stability condition, states that if the sum of the absolute values of the import and export demand elasticities with respect to the exchange rate is greater than one, the foreign exchange market is stable and currency devaluation leads to an improvement in the trade balance.
3. 2 Marshall-Lerner Condition considering imported inputs and without considering export functions Shea (1979) believes that when a portion of imports is used as an input for domestic production, the devaluation of the national currency or the increase in the exchange rate may increase production costs and therefore may not be a good policy for improving a country's trade balance equilibrium.
Duru et al (2022) investigated the Marshall-Lerner condition and the J-curve using data from 1982-2020 for Nigeria, using the ARDL method to examine the short-term and long-term effects of exchange rate uncertainties on the trade balance.
Consequently, the approach that we must consider in the Iranian economy to examine the effect of exchange rate changes on the balance of payments is the Marshall-Lerner condition while accounting for import inputs and considering export functions.
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