Co-movement of exchange rate and housing rental rate in Iranian economy: An econophysic analysis

The historical study of Iran's economy shows that one of the main problems that Iran's economy has always faced is exchange rate fluctuations and their effects. For this purpose, in the current research, wavelet coherence analysis has been used to investigate the relationship between the exchange rate and the rental rate (the price of money in the housing market) in different time scales between the spring of 1980 and the winter of 2021. The results show that in the short-term time scale, The real exchange rate and the rental rate have a high degree of coherence, and the two variables are in opposite phases in most intervals, which shows the confirmation of the monetary model with a sticky price. But in the medium-term and long-term time scale, this relationship is the same phase, which shows the approval of the monetary model with flexible prices. Also, the results show that in the long term, this relationship was significant only in years when the real exchange rate was negative and strictly controlled.

Co-movement of exchange rate and housing rental rate in Iranian economy: An econophysic analysis Keywords:

wavelet theory , Rental Rate , Exchange Rate , Wavelet Coherence