Purpose – To avoid aggregation bias by using trade data at bilateral level so that we can determine how sensitive are Britain’s inpayments and outpayments to the value of the British pound.Design/methodology/approach – The method is based on the bounds testing approach to cointegration and...

This paper investigates the long-run relationship between Iranian trade balance and the black market value of Iranian rial by employing cointegration technique. It is shown that in a oil producing country like Iran due to rent-seeking opportunities, depreciation of the rial in the black market...