Business Intelligence

Exchange Rate Gap Effect On Economic Growth In Iran

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Executive Summary

This paper examines the effect of exchange rate gap (difference between official and parallel market rates) on economic growth in Iran during 1961-2007 based on the Error Correction Model. The empirical result indicates that, there is a significant long run relationship between exchange rate gap and economic growth. So, adopting a suitable exchange rate policy to adjust the real exchange rate may have an important role to increase output capacity and achieving higher economic growth.

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