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Real exchange rates, dollarization and industrial employment in Latin America

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Author Info
Arturo Galindo () (Universidad de los Andes)
Alejandro Izquierdo () (Inter-American Development Bank (IDB))
José M. Montero () (Banco de España)

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Abstract

We use a panel dataset on industrial employment and trade for 9 Latin American countries for which liability dollarization data at the industrial level is available. We test whether real exchange rate fluctuations have a significant impact on employment, and analyze whether the impact varies with the degree of trade openness and liability dollarization. Econometric evidence supports the view that real exchange rate depreciations can impact employment growth positively, but this effect is reversed as liability dollarization increases. In industries with high liability dollarization, the overall impact of a real exchange rate depreciation can be negative.

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File URL: http://www.bde.es/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/06/Fic/dt0601e.pdf
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Publisher Info
Paper provided by Banco de España in its series Banco de España Working Papers with number 0601.

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Length: 32 pages
Date of creation: Jan 2006
Date of revision:
Handle: RePEc:bde:wpaper:0601

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Related research
Keywords: manufacturing employment; real exchange rates; debt composition; balance sheet effects;

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Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
F31 - International Economics - - International Finance - - - Foreign Exchange
F34 - International Economics - - International Finance - - - International Lending and Debt Problems
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Pierre-Olivier Gourinchas, 1998. "Exchange Rates and Jobs: What Do We Learn from Job Flows?," NBER Working Papers 6864, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Haltiwanger, John & Kugler, Adriana & Kugler, Maurice & Micco, Alejandro & Pagés, Carmen, 2004. "Effects of Tariffs and Real Exchange Rates on Job Reallocation:Evidence from Latin America," Discussion Paper Series In Economics And Econometrics 0410, Economics Division, School of Social Sciences, University of Southampton. [Downloadable!]
    Other versions:
  3. Guillermo Calvo & Alejandro Izquierdo & Luis-Fernando Mejía, 2004. "On the empirics of Sudden Stops: the relevance of balance-sheet effects," Proceedings, Federal Reserve Bank of San Francisco, issue Jun. [Downloadable!]
    Other versions:
  4. Ignacio Lobato & Sangeeta Pratap & Alejandro Somuano, 2004. "Debt Composition and Balance Sheet Effects of Exchange Rate Volatility in Mexico: A Firm Level Analysis," Working Papers 0405, Centro de Investigacion Economica, ITAM. [Downloadable!]
    Other versions:
  5. Galindo, Arturo & Panizza, Ugo & Schiantarelli, Fabio, 2003. "Debt composition and balance sheet effects of currency depreciation: a summary of the micro evidence," Emerging Markets Review, Elsevier, vol. 4(4), pages 330-339, December. [Downloadable!] (restricted)
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    Other versions:
  8. repec:fth:inadeb:366 is not listed on IDEAS
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  20. Klein, Michael W. & Schuh, Scott & Triest, Robert K., 2003. "Job creation, job destruction, and the real exchange rate," Journal of International Economics, Elsevier, vol. 59(2), pages 239-265, March. [Downloadable!] (restricted)
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  21. Andrew Benito & Ignacio Hernando, 2002. "Extricate: Financial Pressure and Firm Behaviour in Spain," Banco de España Working Papers 0227, Banco de España. [Downloadable!]
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  24. Carranza, Luis J. & Cayo, Juan M. & Galdon-Sanchez, Jose E., 2003. "Exchange rate volatility and economic performance in Peru: a firm level analysis," Emerging Markets Review, Elsevier, vol. 4(4), pages 472-496, December. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Praveen Kujal & Juan Ruiz, 2007. "Cost effectiveness of R&D and strategic trade policy," Banco de España Working Papers 0701, Banco de España. [Downloadable!]
  2. Aitor Lacuesta, 2006. "Emigration and human capital: who leaves, who comes back and what difference does it make?," Banco de España Working Papers 0620, Banco de España. [Downloadable!]
  3. Luis J. Álvarez & Ignacio Hernando, 2006. "Competition and price adjustment in the euro area," Banco de España Working Papers 0629, Banco de España. [Downloadable!]
  4. K. C. Fung & Alicia García-Herrero & Hitomi Iizaka & Alan Siu, 2006. "Hard or Soft? Institutional Reforms and Infrastructure Spending as Determinants of Foreign Direct Investment in China," Banco de España Working Papers 0616, Banco de España. [Downloadable!]
    Other versions:
  5. Mehtap Kesriyeli & Erdal Ozmen & Serkan Yigit, 2005. "Corporate Sector Debt Composition and Exchange Rate Balance Sheet Effect in Turkey," ERC Working Papers 0507, ERC - Economic Research Center, Middle East Technical University, revised Nov 2005. [Downloadable!]
  6. Mehtap Kesriyeli & Erdal Ozmen & Serkan Yigit, 2005. "Corporate Sector Debt Composition and Exchange Rate Balance Sheet Effect in Turkey," Working Papers 0516, Research and Monetary Policy Department, Central Bank of the Republic of Turkey. [Downloadable!]
  7. Óscar J. Arce & David López-Salido, 2006. "House Prices, Rents, and Interest Rates under Collateral Constraints," Banco de España Working Papers 0610, Banco de España. [Downloadable!]
  8. Philip Vermeulen & Daniel Dias & Maarten Dossche & Erwan Gautier & Ignacio Hernando & Roberto Sabbatini & Harald Stahl, 2007. "Price setting in the euro area: some stylised facts from individual producer price data," Banco de España Working Papers 0703, Banco de España. [Downloadable!]
    Other versions:
  9. Mario Izquierdo & Aitor Lacuesta, 2006. "Wage inequality in Spain: recent developments," Banco de España Working Papers 0615, Banco de España. [Downloadable!]
  10. Ricardo Gimeno & Juan M. Nave, 2006. "Genetic algorithm estimation of interest rate term structure," Banco de España Working Papers 0634, Banco de España. [Downloadable!]
  11. Sergio Puente, 2006. "Dynamic stability in repeated games," Banco de España Working Papers 0618, Banco de España. [Downloadable!]
  12. Enrique Alberola & José María Serena, 2007. "Global financial integration, monetary policy and reserve accumulation. Assessing the limits in emerging economies," Banco de España Working Papers 0706, Banco de España. [Downloadable!]
  13. Francisco de Castro & Pablo Hernández de Cos, 2006. "The economic effects of exogenous fiscal shocks in Spain: a SVAR approach," Banco de España Working Papers 0604, Banco de España. [Downloadable!]
    Other versions:
  14. Ricardo N. Bebczuk & Ugo Panizza & Arturo Galindo, 2006. "An Evaluation of the Contractionary Devaluation Hypothesis," RES Working Papers 4486, Inter-American Development Bank, Research Department. [Downloadable!]
  15. Paloma López-García & Sergio Puente, 2006. "Business demography in Spain: determinants of firm survival," Banco de España Working Papers 0608, Banco de España. [Downloadable!]
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