In Iran’s system of tripartite collective bargaining, does the wage-policy maker consistently react optimally to the best move made by the exchange rate-policy maker (Nash-rule) or only to the state of economy (non-Nash rule)?. This paper not only investigates the nature of the political game (Nash rule against non-Nash rule) but also estimates some structural parameters by using 2SLS method and considers various economic scenarios for different bargaining conditions. The results indicate that the Nash-rule equilibrium is unstable and thus the non-Nash rule becomes more meaningful. Under the non-Nash rule, the simulated wage growth exhibits a counter-cyclical pattern and increases with the union of workers’ bargaining power. The government’s role appears to strike a balance between the interests of the employers’and the employees. Consistent with actual observations, the simulated exchange-rate appreciation has acted as a complement to wage growth from 1360 to 1385.
JEL: F16, C71, C72
abdoli, G., & gholami, A. (2011). Game theory Approach on Detrmining Exchange and Wage Rate: Empirical Study in Iran. Journal of Economic Research (Tahghighat- E- Eghtesadi), 46(4), 85-117.
MLA
ghahreman abdoli; Ahmad gholami. "Game theory Approach on Detrmining Exchange and Wage Rate: Empirical Study in Iran". Journal of Economic Research (Tahghighat- E- Eghtesadi), 46, 4, 2011, 85-117.
HARVARD
abdoli, G., gholami, A. (2011). 'Game theory Approach on Detrmining Exchange and Wage Rate: Empirical Study in Iran', Journal of Economic Research (Tahghighat- E- Eghtesadi), 46(4), pp. 85-117.
VANCOUVER
abdoli, G., gholami, A. Game theory Approach on Detrmining Exchange and Wage Rate: Empirical Study in Iran. Journal of Economic Research (Tahghighat- E- Eghtesadi), 2011; 46(4): 85-117.
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