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Designing EU-US Atlantic Monetary Relations: Exchange Rate Variability and Labour Markets

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  • Ansgar Belke
  • Daniel Gros

Abstract

The variability of the euro seems to have a statistically significant and economically small, but non-negligible, impact on labour markets in Euroland. Unemployment tends to increase and employment growth tends to fall whenever the effective exchange rate of the euro or the bilateral euro/dollar exchange rate becomes more variable. In the US a similar effect seems to be operating, but it is statistically less strong, especially concerning employment growth, which seems largely insulated from exchange rate variability. These results fit the general observation that US labour markets are more flexible and that the euro area is considerably more open than the US (exports of goods and services amount to close to 18 per cent of Euroland GDP versus only about 11 per cent for the US). Copyright Blackwell Publishers Ltd 2002.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal The World Economy.

Volume (Year): 25 (2002)
Issue (Month): 6 (06)
Pages: 789-813

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Handle: RePEc:bla:worlde:v:25:y:2002:i:6:p:789-813

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Cited by:
  1. Feldmann, Horst, 2011. "The Unemployment Effect of Exchange Rate Volatility in Industrial Countries," Department of Economics Working Papers, University of Bath, Department of Economics 24073, University of Bath, Department of Economics.
  2. repec:eid:wpaper:01/11 is not listed on IDEAS
  3. Ansgar Belke & Ralph Setzer, 2004. "Contagion, Herding and Exchange Rate Instability - A Survey," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim, Department of Economics, University of Hohenheim, Germany 234/2004, Department of Economics, University of Hohenheim, Germany.
  4. Ansgar Belke & Ralph Setzer, 2003. "Costs of Exchange Rate Volatility for Labour Markets - Empirical Evidence from the CEE Economies," The Economic and Social Review, Economic and Social Studies, Economic and Social Studies, vol. 34(3), pages 267–292.
  5. Ansgar Belke & Thorsten Polleit, 2003. "10 Argumente gegen eine Euro-US-Dollar-Wechselkursmanipulation," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim, Department of Economics, University of Hohenheim, Germany 231/2003, Department of Economics, University of Hohenheim, Germany.
  6. Ansgar Belke & Leo Kaas, 2004. "Exchange Rate Movements and Employment Growth: An OCA Assessment of the CEE Economies," Economic Change and Restructuring, Springer, Springer, vol. 31(2), pages 247-280, June.
  7. Ansgar Belke & Wim Kösters & Martin Leschke & Thorsten Polleit, 2004. "Liquidity on the Rise - Too Much Money Chasing Too Few Goods," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim, Department of Economics, University of Hohenheim, Germany 237/2004, Department of Economics, University of Hohenheim, Germany.
  8. Belke, Ansgar & Setzer, Ralph, 2004. "Exchange Rate Volatility and Employment Growth: Empirical Evidence from the CEE Economies," IZA Discussion Papers 1038, Institute for the Study of Labor (IZA).
  9. Ansgar Belke & Daniel Gros, 2003. "The Cost of Financial Market Variability in the Southern Cone," Revue économique, Presses de Sciences-Po, Presses de Sciences-Po, vol. 54(5), pages 1091-1115.
  10. Elbeck, Matt, 2010. "Advancing the design of a dynamic petro-dollar currency basket," Energy Policy, Elsevier, Elsevier, vol. 38(4), pages 1938-1945, April.

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