The Role of Exchange Rate Pass-Through at Pricing to Market Behavior of Iran's Major Export Shrimp and Caviar

Document Type : Research Paper

Authors

1 Agricultural Economics, Agriculture, Tarbiat Modares University, Tehran,Iran

2 Head of Department of Agricultural economics of Tarbiat Modares University

3 Assistance Professor of Agricultural economics of Tarbiat Modares University

Abstract

The growing trend of shrimp and caviar in the world, due to its high demand, as well as the potential of Iran to supply this demand, is remarkable. According to this approach, in this study, we Analysis the pricing to market (PTM) of the Iranian’s Shrimp and Caviar Exporters Under the three models, nominal exchange rate, real exchange rate and weighted exchange rates. In this regard, the annual data from 1993 to 2015 were used by the Customs Organization of Iran, the World Bank and the Central Bank of the Islamic Republic of Iran. The econometric analysis using the panel corrected standard errors (PCSE) showed that pricing to market behavior (PTM) is influenced by the exchange rate effects (exchange rate pass-through) or country-specific effects, or both. The PTM behavior for caviar was better predicted under the weighted exchange rates model and for shrimp under the real exchange rate model. The analysis of the asymmetric effects of the exchange rate also showed that these effects are symmetric and The negative and significant coefficient estimated for exchange rate asymmetry effect showed that the impact of exchange rate changes was asymmetric and the depreciation had a greater impact than appreciation. Therefore, it is recommended that Iranian exporters identify different market elasticity marks to determine the degree of monopoly and, if necessary, reduce the exchange rate transition in order to increase monopoly power. In countries where the market is a competitive and elastic product, it is necessary to identify the behavior of other competitors and reduce export prices to compete with other countries where export shrimp and caviar.

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References

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Agricultural Economics
Volume 11, Issue 4
March 2018
Pages 107-125

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