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Productivity improvement is considered as one of the important strategies for providing economic growth and raising firms’ competitiveness. In this study, using the Divisia method, first the total factor productivity has been calculated during 2003-2009 and then the effects of trade openness, energy consumption and human capital on the total factor productivity has been investigated within subsectors of Iran’s industry. The estimation results using panel data model indicate that the trade openness, energy consumption and human capital have positive and significant effects on the total factor productivity. Meanwhile, the effect of skilled and experienced workers on the total factor productivity is stronger than educated workers.

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Trade balance is regarded as both main macroeconomic factor and strategic constraint in developing countries. Exchange rate, which is defined as parity relationship between national currency and foreign currencies, is a vital determinant of countries’ trade balance. As the real effective exchange rate measures the changes in prices and relative costs by a common currency, it is the most popular indicator to measure competitiveness. On one hand, fluctuation of this index represents disequilibrium in the economy, and on the other hand, it is the cause of more instability. Since the direction and size of the effects of real exchange rate on trade balance is an important macroeconomic issue, this articleinvestigates the real effective exchange rate changes on trade balance in Iran and its’ major partners using the Vector Error Correction Model ( VECM ) over the period 1993-2011. The results indicate that the real effective exchange rate volatility reduces trade balance only for Germany in the short run and rises it for Italy in the long run.

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Understanding the nature of the causal relationship among economic variables is crucial for the economic policy-makers and planners. So, this study investigates Granger causality between producer price index (PPI) and consumer price index (CPI) for the economy of Iran. From a policy-making point of view, the findings of the study may inform economic policy-makers in pursuing effective anti-inflationary policies. To this end, monthly data are used over the period 1990- 2011. The results of the cointegration test indicate that there is a long-run equilibrium relationship between these variables. According to Hsiao test, there is bi-directional causality between consumer price index (CPI) and producer price index (PPI) in both short-run and long-run. Toda and Yamamoto test also indicate the bi-directional causal relationship between the variables. However, it seems that causality from PPI to CPI is stronger than that from CPI to PPI, supporting the Cushing and McGarvey (1990) hypothesis.