THE IMPACT OF THE EXCHANGE RATE ON THE TRADE BALANCE OF THE REPUBLIC OF ARMENIA / ՓՈԽԱՐԺԵՔԻ ԱԶԴԵՑՈՒԹՅՈՒՆԸ ՀԱՅԱՍՏԱՆԻ ՀԱՆՐԱՊԵՏՈՒԹՅԱՆ ԱՌԵՎՏՐԱՅԻՆ ՀԱՇՎԵԿՇՌԻ ՎՐԱ

Abstract

Foreign trade plays a special role for the Republic of Armenia with a super-small economy. The imperative of export-oriented industrial policy has always been an integral part of the economic policy of the Government of the Republic of Armenia. In this context, taking the balance of payments elasticity approach as a basis and considering international experience, using a regression model, the direct as well as indirect impact of exchange rate changes on the export and import volumes of the economy of the Republic of Armenia was assessed. The calculations include the necessary data from seventeen countries that are the main partners in the foreign trade of the Republic of Armenia. According to the results of the regression analysis, imports and exports in the Republic of Armenia react significantly to changes in the exchange rate. The devaluation of the national currency of the dram improves the current account of the balance of payments of the Republic of Armenia, and achieving the desired indicators of the trade balance in terms of income impact requires stimulating exports with government support.