Application of futures in calculating optimal hedge ratio in crude oil market: Comparison between static and dynamic approaches

Document Type : Original Article

Authors

1 Master of Economics, Department of Economics, University of Ilam

2 Associate Professor of Economics, Department of Economics, University of Ilam

Abstract

one of the methods for developing foreign trade in each country is the precise understanding of the commercial economic potential of major partners and ways of improving the volume and composition of foreign trade, including exports and imports. on this basis, in this study to examine the commercial potential between iran and member states of the D8 (eight islamic countries developing) during the 1992 - 2016 model of gravity model, the dynamic spatial method (sgmm) is chosen as the most appropriate method of estimation. the results show that the gross domestic product coefficient (gdp) and trade partner countries are positive and therefore, the gross domestic product as a measure of the economic size of countries has a direct impact on their bilateral trade. The geographic distance coefficient was seen as a measure of negative transportation costs, which indicates that the greater the distance between the capital of countries, the degree of bilateral trade is reduced. the coefficient of the SAARC and ASEAN is positive and significant, which indicates that Iran's membership in these countries increases the trade potential of this country. Also, the spatial Rho coefficient has been negative, implying a negative spatial dependence between the D8 countries. The results of the trade potential estimation show that the total trade potential of Iran with D8 has been 2398.47977 billion dollars the period under review, of which only 1400 billion dollars has been realized.  

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