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The Effect of Productivity on Real Exchange Rate with the Emphasis the Abundance of Skilled and Unskilled Labor

Author

Listed:
  • Fazayel Ardakani, Seyed Bagher

    (Ph.D. Candidate in Economics, Shahid Bahonar University of Kerman)

  • Akbri Fard, Hossein

    (Assistant Professor of Economics, Shahid Bahonar University of Kerman)

  • Jalaee, Sayyed Abdolmajid

    (Professor of Economics, Shahid Bahonar University of Kerman)

Abstract

This paper develops the traditional two-part model in which uses labor and capital. That is, in this model, for production are used capital, skilled labor and unskilled labor. It is assumed; tradable sector for production use capital and skilled labor and non-tradable sector use capital and unskilled labor. The main objective of this article is investigation the effects of productivity on the real exchange rate index according to the abundance of skilled and unskilled labor. For this purpose, This article are used pooled data including Iran and trade partners of Iran in the period 2000-2015 using Fixed Effects (FE), Dynamic Ordinary Least Square (DOLS), Fully Modified Ordinary Least Square (FMOLS) and Pooled Mean Group (PMG) methods. The Estimated results show that the increase in productivity will lead to higher (lower) real exchange rate appreciation in countries that have the high abundance of (unskilled) skilled labor

Suggested Citation

  • Fazayel Ardakani, Seyed Bagher & Akbri Fard, Hossein & Jalaee, Sayyed Abdolmajid, 2018. "The Effect of Productivity on Real Exchange Rate with the Emphasis the Abundance of Skilled and Unskilled Labor," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 5(1), pages 85-112, May.
    • Handle: RePEc:ris:qjatoe:0099
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    More about this item

    Keywords

    Real exchange rate; Productivity; Skilled labor; Unskilled labor;
    All these keywords.

    JEL classification:

    • E39 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Other
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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