game theory approach on detrmining exchange and wage rate: empirical study in iran

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