The Effect of a Preferential Trade Agreement between Iran and Turkey on Trade Cycles and Tariff Revenues of Iran:An Analysis Employing SMART Model

Abstract

In this paper, the effects of a Preferential Trade Agreement between Iran and Turkey are estimated by employing a partial equilibrium model. The results indicate that an agreement would increase both export and import of Iran to Turkey; nevertheless, this export would rise less than the import due to the less level tariff of Iran compared with Turkey. However, the main increasing import is from Turkey is capital and intermediary goods whose effects is different from consumption goods. Moreover, in this case, the tariff revenues of Iran would decrease, but it is different from goods level to two-digit H.S code; in fact regarding to the amount of decreasing tariff and the import demand elasticity of each good, the tariff revenues related to some goods would increase.