Investigating the impact of monetary, financial and exchange market conditions on fuel smuggling in the Iranian economy using the SVAR model

Hashemi, Zahra; Dahmarde, Nazar

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Investigating the impact of monetary, financial and exchange market conditions on fuel smuggling in the Iranian economy using the SVAR model

Zahra Hashemi ^*¹

, Nazar Dahmarde²

1- University of Sistan & Baluchestan , hashemizahra7@pgs.usb.ac.ir
2- University of Sistan & Baluchestan

Abstract: (129 Views)

The article examines the impact of monetary, financial and exchange market pressure indexes on fuel and petroleum products smuggling in Iran's economy by applying SVAR structural vector autoregression model based on seasonal data of 1390-1400. the model results show that the impulse response from the domestic and FOB Persian Gulf price difference of petroleum products, fuel smuggling constantly aggravates and its effect is increasing. In addition, the impulse response of the financial condition index and monetary conditional index is not very important, and the impulse from the exchange market pressure index has a negative effect at first, and after 5 periods of shock, it becomes zero and its effect becomes positive.
The results of the variance decomposition analysis show that in different periods, the fluctuations of the fuel smuggling variable are explained by the difference between domestic and FOB Persian Gulf price differenence of petroleum products. In fact, fixing the domestic oil products price below the export parity price is a very inefficient way to subsidize domestic oil consumption. In addition to the waste caused by low price, it has provided rents for smugglers and worsens the country's fiscal imbalance.

Keywords: Fuel Smuggling, Monetary Condition Index, Financial Condition Index, Exchange Market Pressure Price Differencial