Analysis of the Asymmetric Effect of Exchange and Bank Facility Rates on Labor Productivity in Iran: NARDL Approach

Subject Areas : Financial Economics

Saeed  Dehghan Manshadi ¹ (PhD student in Economics, Kerman Branch, Islamic Azad University, Kerman, Iran.)
Mohsen  Zayandehroodi ² (Associate Professor, Department of Economics, Kerman Branch, Islamic Azad University, Kerman, Iran.)
Abdolmajid  Jalaee ³ (Professor, Department of Economics, Shahid Bahonar University of Kerman, Kerman, Iran.)

Received: 2021-11-02 Accepted : 2022-01-03 Published : 2022-10-01

Keywords: bank facility rate, Labor Productivity, Iran, Asymmetric exchange rate, self-explanatory pattern with nonlinear autoregressive distributed lag (NARDL),

Abstract :

One of the most critical indicators of one-factor productivity is the labor productivity index. This index has various and broad applications in the dimensions of economic policy. On the one hand, the labor productivity index determines per capita income levels and living standards. On the other hand, efficiency combined with other factors such as capital stock can make technical changes. The issue of how monetary and exchange rate variables affect labor productivity has been of particular importance in recent international studies. Due to the importance of the issue, this study investigates the asymmetric effect of exchange rate and bank facility rates on labor productivity in Iran in 1971-2018. The results of model estimation by self-explanatory method with nonlinear autoregressive distributed lag (NARDL) indicate that in the short and long run, the effect of free-market exchange rates and bank lending rates on labor productivity is asymmetric so that reductions in exchange rates have a significant direct effect on labor productivity and increases are not significant. In addition, increases in bank lending rates have a direct effect and reductions have an adverse effect on labor productivity.

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