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

Seyed Bagher Fazayel Ardakani (), Hossein Akbri Fard () and Sayyed Abdolmajid Jalaee ()
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Seyed Bagher Fazayel Ardakani: Ph.D. Candidate in Economics, Shahid Bahonar University of Kerman
Hossein Akbri Fard: Assistant Professor of Economics, Shahid Bahonar University of Kerman
Sayyed Abdolmajid Jalaee: Professor of Economics, Shahid Bahonar University of Kerman

Quarterly Journal of Applied Theories of Economics, 2018, vol. 5, issue 1, 85-112

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

Keywords: Real exchange rate; Productivity; Skilled labor; Unskilled labor (search for similar items in EconPapers)
JEL-codes: E39 F32 F41 (search for similar items in EconPapers)
Date: 2018
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