Determination of Wages and Exchange Rate with Game Theory

Vida VARAHRAMI

Abstract


Abstract. In every country, wages are determined by Nash rule or governments determine wages. According to Nash equilibrium, policy of determination wages is respect to exchange rate and there is a game between NWC and MAS. In this paper, we survey a game theory method to survey policy of determination wages and exchange rate to stability economics. When exchange rate increases, import good's price rise and we have cost push inflation, therefore wages are increased and then we have unemployment. Then wages are determined respect to exchange rate changes. But in real world, some conditions affected on Nash equilibrium and wages are determined as non Nash method and government equals between benefits of workers and principals. In this paper, we survey wage making in Iran and reveal that in some courtiers such as Iran, government determines wages and create equilibrium in labor market.

Keywords. Wage, Exchange rate, Nash Equilibrium, Inflation, Game theory method.

JEL. Q30, Q31, Q32.


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References


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DOI: http://dx.doi.org/10.1453/jest.v2i4.503

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