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Exchange Rate Volatility Effects on the German Labour Market: A Survey of Recent Results and Extensions

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Author Info
Buscher, Herbert S. () (Centre for European Economic Research (ZEW))
Mueller, Claudia
Abstract

In this paper, a survey on theoretically expected and empirically proved impacts of exchange rate volatility is given. With regard to the West German unemployment, the effects of volatility are empirically analyzed using three different volatility measures and four country groups. In autoregressive models, a significant disturbing impact of volatility can be found with annual data as well as with monthly data for the whole period. While this impact does not differ for the three volatility measures, it is, however, less strong when using the monthly data. Differentiating for different subperiods by use of the monthly data, the reported impact is stronger for relatively stable periods and country groups. When isolating the cyclical component of the unemployment rate, it can be demonstrated that the whole reported impact solely affects this component. In a dynamic Okun-type relation, an additional significant impact of volatility, however, cannot be proved for all subperiods.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 37.

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Length: 43 pages
Date of creation: Mar 1999
Date of revision:
Handle: RePEc:iza:izadps:dp37

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Related research
Keywords: European Monetary Union; exchange rate volatility; Okun's law; West German labour market;

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Find related papers by JEL classification:
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
F31 - International Economics - - International Finance - - - Foreign Exchange

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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. Joshua Aizenman & Nancy P. Marion, 1996. "Volatility and the Investment Response," NBER Working Papers 5841, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Stirböck, Claudia & Heinemann, Friedrich, 1999. "Capital Mobility within EMU," ZEW Discussion Papers 99-19, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  3. Peree, Eric & Steinherr, Alfred, 1989. "Exchange rate uncertainty and foreign trade," European Economic Review, Elsevier, vol. 33(6), pages 1241-1264, July. [Downloadable!] (restricted)
  4. Peter B. Clark & Hamid Faruqee, 1997. "Exchange Rate Volatility, Pricing to Market and Trade Smoothing," IMF Working Papers 97/126, International Monetary Fund.
  5. Dixit, Avinash K, 1989. "Entry and Exit Decisions under Uncertainty," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 620-38, June. [Downloadable!] (restricted)
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  6. Müller, Claudia & Buscher, Herbert S., 1999. "The impact of monetary instruments on shock absorption in EU-Countries," ZEW Discussion Papers 99-15, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  7. De Grauwe, Paul, 1987. "International trade and economic growth in the european monetary system," European Economic Review, Elsevier, vol. 31(1-2), pages 389-398. [Downloadable!] (restricted)
  8. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-29, June. [Downloadable!] (restricted)
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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. Puhani, Patrick A., 1999. "Labour mobility - an adjustment mechanism in Euroland? : Empirical evidence for Western Germany, France and Italy," ZEW Discussion Papers 99-47, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
    Other versions:
  2. Müller, Claudia & Buscher, Herbert S., 1999. "The impact of monetary instruments on shock absorption in EU-Countries," ZEW Discussion Papers 99-15, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  3. Puhani, Patrick A., 1999. "Labour Mobility - An Adjustment Mechanism in Euroland?," IZA Discussion Papers 34, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Ansgar Belke & Ralph Setzer, 2004. "Contagion, Herding and Exchange Rate Instability - A Survey," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 234/2004, Department of Economics, University of Hohenheim, Germany. [Downloadable!]
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