خاصيت حفاظتي نظام هاي ارزي مورد ايران

Insulation Properties of Exchange Regimes; Case of Iran

The studies on Iran economy emphasize unified and adjustable exchange rate regime, particalarly the Crawling Peg, as well as the coordination of other policies. After brief review of the above studies and previous experinces, a theoretical model on the basis of insulation property approach is presented, Since policy goal (loss function) in this research is taken as the variance of output and price, every regime that has the least variance of output and price is considered as optimal. Oil, governtment budget policy and wage shocks, as the most important real shock in the economy of Iran, influencing output and price, have been taken into consideration in the theoretical model. The model including aggregate supply and demand, and total level of price and wage, has been solved for the loss function, This model has been estimated on the basis of information about Iran during 1352-78. Using the estimated structural coefficients, the loss function has been simulated at different scenarios. The result of these simulations is that at the present state of economy, the Crawling Peg regime may not be an optimal one. But, in order for the regime to be performed with the least cost (the least variance of output and price), all of the following conditions have to be satisfied: (1) the exchange rate is adjusted biannually; (2) the monetary policy is coordinated with the exchange rate regime; (3) the monetary policy is completely credible; (4) the income policy is successfully performed, where upon wage shocks are reduced: and (5) difference of the total level of domestic and foreign prices is reduced at half. As long as all the above conditions have not been satisfied, the fixed exchange rate regime is optimal in stabilizing output and price.