aAssistant Professor, Department of Economics, Payam Noor University, Iran. Email: bitashayegan@yahoo.com
bAssistant Professor, Department of Economics, Payam Noor University, Iran. Email: abolhasani2003@yahoo.com
cAssistant Professor, Department of Economics, Islamic Azad University, Iran. Email: ghaffari@srbiau.ac.ir
dAssociate Professor, Department of Economics, Imam Sadegh (AS) University, Iran. Email: shahdani@yahoo.com
ePhD candidate in Economics, Payam Noor University, Iran
1Corresponding Author,
JEL Classification: F15-F31-R10
The objective of the present study was to investigate Linder theory in selected Islamic countries applying various exchange rate arrangements. Countries examined in this study group were ECO, GCC and D-8 which consisted of 26 countries during the years 2001–2012 using the generalized gravity model and a two-step, systemic generalized method of moments (GMM). Common unit root tests for dynamic panel data, Sargan and serial correlation (M2) were applied in order to evaluate stationary of variables, no correlation was observed between the instruments and stochastic terms and limits of generalized moments. The results showed that the pooled data of Linder hypothesis was significant and confirmed with a coefficient of 0.03. But applying different exchange rate arrangements in regional trade cooperation, Linder hypothesis was confirmed for GCC and has not been approved for other blocks. It proves the fact that regional trade blocks with different exchange rate arrangements, has different results in Linder theory.
Linder theory, economic similarity, exchange rate arrangements, regional trade corporations, generalized gravity model
