با همکاری انجمن اقتصاد کشاورزی ایران
نوع مقاله : مقالات پژوهشی
نویسنده
گروه اقتصاد، دانشگاه آزاد اسلامی بناب، بناب، ایران
کلیدواژهها
عنوان مقاله English
نویسنده English
Introduction
The Real Effective Exchange Rate (REER) is a crucial indicator used to assess a country's currency value against a basket of foreign currencies, while accounting for inflation differentials. This measure reflects a country's competitiveness in international trade, particularly in sectors such as agriculture, which are highly sensitive to economic fluctuations and investment dynamics. Given the critical role of agricultural investment in driving economic growth, this study investigates the impact of REER uncertainty on agricultural investment across various provinces of Iran between 2008 and 2023. By employing the two-stage Swamy estimation approach, the research explores the regional disparities in the effects of exchange rate uncertainty and offers insights into how such volatility influences agricultural investment decisions across diverse geographical regions.
Materials and Methods
This study utilizes the Generalized Autoregressive Conditional Heteroskedasticity (GARCH) model to quantify uncertainties in the Real Effective Exchange Rate (REER). The research applies panel data econometric techniques to examine the relationships between REER uncertainty and agricultural investment, using data from sources such as the Iranian Statistical Center, the Central Bank of Iran, and the World Bank. To address the heterogeneity of regional dynamics, both static and dynamic models with variable coefficients were employed. The analysis included key explanatory variables, such as provincial GDP in agriculture, interest rates, bank credits, and trade openness. The estimation and solution of the regression functions were conducted using Eviews9 and Stata14 software. Unit root tests, including the Fisher and Dickey-Fuller tests, were applied to assess the stationarity of the variables, while Pedroni cointegration tests were employed to confirm the existence of long-term relationships between the variables.
Results and Discussion
The findings of this study demonstrate that REER uncertainty has varying effects on agricultural investment across different provinces of Iran. Specifically:
Positive Impacts: In provinces such as Isfahan and West Azerbaijan, REER uncertainty had a positive and significant effect on agricultural investment. This could be attributed to adaptive strategies employed by investors that help enhance competitiveness in these regions despite currency fluctuations.
Negative Impacts: Conversely, provinces such as Semnan, Sistan and Baluchistan, Mazandaran, East Azerbaijan, and Kermanshah experienced negative effects, where higher REER uncertainty led to reduced investor confidence and disrupted long-term financial planning in the agricultural sector.
Moreover, variables such as provincial agricultural GDP, interest rates, and bank credits exhibited a significant positive impact on agricultural investment. Conversely, higher interest rates tended to discourage private sector investment, demonstrating the importance of stable and favorable macroeconomic policies. These findings are consistent with existing literature, which underscores the need for a stable exchange rate policy and a conducive investment environment to promote agricultural growth.
Conclusion
Agriculture plays a vital role in Iran’s economic stability and food security; however, the sector faces significant challenges associated with real effective exchange rate (REER) uncertainty. Research indicates that exchange rate volatility can negatively affect agricultural productivity, investment, and trade by increasing economic risk and reducing planning efficiency. In this context, fluctuations in REER can disrupt input costs, market stability, and competitiveness, thereby constraining the overall performance of the agricultural sector. The findings of this study emphasize the need for region-specific policies that mitigate the negative impacts of exchange rate fluctuations and harness potential opportunities for agricultural investment. Policymakers should focus on stabilizing exchange rates and implementing supportive policies to encourage sustained investment in agriculture, especially in economically vulnerable provinces that are more affected by exchange rate volatility. By addressing these challenges, the agricultural sector can contribute more effectively to Iran's overall economic development and food security goals.
Acknowledgement
I would like to thank the Iranian Statistical Center, the Central Bank of Iran, and the World Bank for providing the essential data for this research. Special thanks are also extended to colleagues and peer reviewers who offered valuable insights and constructive feedback during the research process.
کلیدواژهها English
Authors retain the copyright. This is an open access article distributed under Creative Commons Attribution 4.0 International License (CC BY 4.0).
