Evaluation of Sustainability of the Foreign Exchange Rate Regimes in Iran Based on Duration Models

Iran's economy as a developing and oil economy, needs to choose appropriate exchange rate regime is to achieve its economic goals. Some characteristics such as little diversity in production and trade, weak and underdevelopment financial markets and other features of the Iranian economy, Requires the choice of exchange rate regime be based on the features of the country. However, the choice of exchange rate regime a country, many variables affect that regardless of their choice of currency regime will be difficult and illogical. Hence, in this study using survival analysis and use of Reinhart and Rogoff approach to investigate the role of political and economic factors on the choice of a fixed exchange regime in Iran based on monthly data during the period 1980-2017. The advantage of survival analysis method it is time dependence that may exist in the occurrence of an event be included and the time can be used as a proxy for structural factors and unobservable variable in country. The results showed that political and economic variables affect the choice of the fixed exchange system in the country. The impact of political variables on the country's exchange rate regime shows that only economists are not involved in the decision on the exchange rate in Iran, and the preferences of political officials have a significant impact on foreign exchange policies.