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The effect of real exchange rate on unemployment

Author

Listed:
  • Zahra Bakhshi

    (Shiraz Branch, Islamic Azad University, Shiraz, Iran)

  • Mehrzad Ebrahimi

    (Shiraz Branch, Islamic Azad University, Shiraz, Iran)

Abstract

Unemployment is one of the problems that global economics, especially the economy of developing countries such as Iran is faced with. Therefore, there have been many studies to investigate the variables which affect unemployment in macroeconomics. Considering exchange rate volatility in recent years which have affected most of major variables of economy in Iran, this study tried to investigate the relationship between exchange rate and unemployment in Iran using the annual data of 30 years (from 1981 to 2012). To achieve the objectives of the study, autoregressive econometric model with distributed lag was used to assess the relationship between real exchange rate and unemployment. This model consisted of five main variables, namely unemployment rate, exchange rate, export, import, and gross domestic product. The results of the study demonstrated that economic growth had a significant and positive effect on unemployment. In addition, it was shown that there was a negative relationship between unemployment and exchange rate.

Suggested Citation

  • Zahra Bakhshi & Mehrzad Ebrahimi, 2016. "The effect of real exchange rate on unemployment," Marketing and Branding Research, EUROKD, vol. 3(1), pages 4-13.
    • Handle: RePEc:bco:mbraaa::v:3:y:2016:p:4-13
    DOI: 10.33844/MBR.2016.60281
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    References listed on IDEAS

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