Impact of the BDI Volatility, exchange Rate Movement and Global Economic Activity on Loaded Port Cargo in Iran

Document Type : Research Paper

Authors

1 Ph.D. Studnt of Economics, Islamic Azad University, Science and Research Branch

2 Professor of Economics, University of Alzahra

3 Assistant Professor at Department of Economic, Science and Research Branch, Islamic Azad University

4 Professor of Economics, University of Alameh Tabatabaee

Abstract

According to the Trade and Development Organization Seaborne Trade accounts for more than 90% of total trade. In Iran, including oil statistics, this share is about 98% in imports and 85% in exports. Therefore, it is important to identify the factors affecting Iran's Seaborne trade. The Baltic Dry Index is one of the leading economic indicators that closely relates to global economic activities and measures the shipping economy. This article explores the impact of the BDI Volatility, exchange rate movements and global economic activity on loaded cargoes in Iran in the period of 1379: 01- 1398: 12. BDI Volatility were measured by using conditional variance AR(1) and GARCH(1, 1). The results of the generalized least squares tests of FMOLS and CCR-corrected component regression showed that The long-term elasticity of loaded port cargo to the global economic activity index and the nominal exchange rate (depreciation of the currency) is positive , while the  elasticity of loaded port cargo to  the BDI volatility is negative.
The results indicate that the growth of the global economy and the competitiveness tend to  increase the Seaborne Trade in Iran, while the BDI volatility had  a negative impact on the growth of total loaded cargo in Iran. Due to the estimated error correction coefficient, the convergence of the model towards the long-run equilibrium is slow.

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References

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