Program and Development Research

Program and Development Research

The effect of foreign shocks on the labor market in Iran under different exchange rate regimes: DSGE approach

Document Type : Original Article

Authors
masuomeh gharanjik 1
Gholamreza Zamanian 2
Mossayeb Pahlavani 3
Marzie Esfandiari 3
1 PhD student in Economics, Faculty of Management and Economics, University of Sistan and Baluchestan, Zahedan, Iran.
2 Associate Professor, Department of Economics, Faculty of Management and Economics, University of Sistan and Baluchestan, Zahedan, Iran (Corresponding Author).
3 Associate Professor, Department of Economics, Faculty of Management and Economics, University of Sistan and Baluchestan, Zahedan, Iran.
10.22034/pbr.2025.483767.1464
Abstract
According to the macroeconomic literature, the effect of various internal and external shocks on macroeconomic variables and then on labor market variables in different exchange regimes are different from each other. Based on this, this study investigates the effect of external shocks including oil revenue shock, foreign inflation shock and exchange rate shock on labor market variables in three types of floating, fixed and managed floating exchange regimes using the Dynamic Stochastic General Equilibrium (DSGE) model. The model used included households, firms, the government, monetary policy makers, and the foreign sector. The results of the impulse response functions show that the analysis of the effect of the oil revenue shock on labor market variables shows that the effect of this shock was positive on employment and negative on unemployment. This positive effect is more in the fixed exchange rate system than in the managed floating exchange rate system and in the managed floating exchange rate system more than in the floating exchange rate system. The impact of foreign inflation on employment in both fixed and managed floating exchange rate systems was positive and has led to an increase in employment. But in the floating exchange rate system was negative, and it has reduced employment. Also, the effect of the exchange rate shocks on employment, labor force participation and providing job opportunities in the fixed exchange rate system was positive and has caused an increase in these variables.
Keywords
Regional Competitiveness
Sustainable Competitiveness
Economic Competitiveness
Sustainability
Composite Index

Subjects

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