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Real Exchange Rates, Dollarization and Industrial Employment in Latin America

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  • Arturo Galindo

    ()

  • Alejandro Izquierdo

    ()

  • José Manuel Montero

Abstract

This paperuses a panel dataset on industrial employment and trade for 9 Latin American countries for which liability dollarization data at the industrial level is available. It tests 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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Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 4478.

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Date of creation: Oct 2006
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Handle: RePEc:idb:wpaper:4478

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