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Sectoral Employment, Wages and the Exchange Rate: Evidence from the U.S

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  • Mohsen Bahmani-Oskooee

    ()
    (University of Wisconsin-Milwaukee)

  • Ida A. Mirzaie

    (The Ohio State University)

  • Ilir Miteza

    (University of Michigan-Dearborn)

Abstract

The literature on the impact of devaluation on domestic production includes many studies that have used aggregate output data such as real GDP. A few recent studies have began looking at the response of sectoral output to currency depreciation. In this paper we consider eight sectors of the U.S. economy and investigate the production, nominal wages and the real wages of each sector to depreciation of the dollar using a new cointegration technique that does not require testing for unit roots. The main conclusion of the paper is that while depreciation of the dollar has short-run impact on all three variables, it has no long-run effects in most sectors.

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File URL: http://college.holycross.edu/RePEc/eej/Archive/Volume33/V33N1P125_136.pdf
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Bibliographic Info

Article provided by Eastern Economic Association in its journal Eastern Economic Journal.

Volume (Year): 33 (2007)
Issue (Month): 1 (Winter)
Pages: 125-136

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Handle: RePEc:eej:eeconj:v:33:y:2007:i:1:p:125-136

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Postal: c/o Dr. Alexandre Olbrecht, The Anisfield School of Business 205, Ramapo College, 505 Ramapo Valley Road, Ramapo, New Jersey 07430, USA
Phone: (201) 684-7346
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Web page: http://www.ramapo.edu/eea/journal.html
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  1. Hakkio, Craig S. & Rush, Mark, 1991. "Cointegration: how short is the long run?," Journal of International Money and Finance, Elsevier, Elsevier, vol. 10(4), pages 571-581, December.
  2. Kandil, Magda & Mirzaie, Ida Aghdas, 2003. "The effects of dollar appreciation on sectoral labor market adjustments: Theory and evidence," The Quarterly Review of Economics and Finance, Elsevier, Elsevier, vol. 43(1), pages 89-117.
  3. Bahmani-Oskooee, Mohsen & Ratha, Artatrana, 2008. "Exchange rate sensitivity of US bilateral trade flows," Economic Systems, Elsevier, Elsevier, vol. 32(2), pages 129-141, June.
  4. Glick, Reuven & Hutchison, Michael M, 1990. "Does Exchange Rate Appreciation 'Deindustrialize' the Open Economy? A Critique of U.S. Evidence," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 28(1), pages 19-37, January.
  5. Joseph Tracy & Linda Goldberg & Stephanie Aaronson, 1999. "Exchange Rates and Employment Instability: Evidence from Matched CPS Data," American Economic Review, American Economic Association, American Economic Association, vol. 89(2), pages 204-210, May.
  6. Kremers, Jeroen J M & Ericsson, Neil R & Dolado, Juan J, 1992. "The Power of Cointegration Tests," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, Department of Economics, University of Oxford, vol. 54(3), pages 325-48, August.
  7. Burgess, Simon M & Knetter, Michael M, 1998. "An International Comparison of Employment Adjustment to Exchange Rate Fluctuations," Review of International Economics, Wiley Blackwell, Wiley Blackwell, vol. 6(1), pages 151-63, February.
  8. Mohsen Bahmani-Oskooee & Zohre Ardalani, 2006. "Exchange Rate Sensitivity of U.S. Trade Flows: Evidence from Industry Data," Southern Economic Journal, Southern Economic Association, Southern Economic Association, vol. 72(3), pages 542-559, January.
  9. Hsiao, Cheng, 1981. "Autoregressive modelling and money-income causality detection," Journal of Monetary Economics, Elsevier, Elsevier, vol. 7(1), pages 85-106.
  10. Thorvaldur Gylfason & Michael Schmid, 1983. "Does Devaluation Cause Stagflation?," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 16(4), pages 641-54, November.
  11. Jose Campa & Linda S. Goldberg, 1997. "The evolving external orientation of manufacturing: a profile of four countries," Economic Policy Review, Federal Reserve Bank of New York, Federal Reserve Bank of New York, issue Jul, pages 53-81.
  12. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
  13. Bahmani-Oskooee Mohsen & Mirzaie Aghdas, 2000. "The Long-Run Effects of Depreciation of The Dollar on Sectoral Output," International Economic Journal, Taylor & Francis Journals, Taylor & Francis Journals, vol. 14(3), pages 51-61.
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