Bilateral Exchange Rates and Jobs
AbstractWe study the labour market effects of bilateral exchange rate realignment. We place emphasis on the composition of trade, the role of intermediates, and the underlying conditions of the labour market. Employment effects hinge on the fraction exported to and imported from the trading partner. A larger fraction exported to and a smaller fraction imported from the trading partner make it more likely that appreciation has beneficial effects. Furthermore, more sticky price expectations in wage formation, a smaller fraction of intermediates in the production process, and a lower rate of importer pass through make it more likely that appreciation of the exchange rate of the trade partner has positive employment effects. At a more technical level, the scope for substitution away from higher priced inputs, either towards other sources of supply, or towards value-added, is also important to the direction and magnitude of changes in employment.
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Bibliographic InfoPaper provided by The Vienna Institute for International Economic Studies, wiiw in its series wiiw Working Papers with number 83.
Length: 31 pages including 2 Tables and 3 Figures
Date of creation: Jun 2012
Date of revision:
Publication status: Published as wiiw Working Paper
Other versions of this item:
- Eddy Bekkers & Joseph Francois, 2012. "Bilateral Exchange Rates and Jobs," Economics working papers 2012-02, Department of Economics, Johannes Kepler University Linz, Austria.
- Bekkers, Eddy & Francois, Joseph, 2012. "Bilateral Exchange Rates and Jobs," CEPR Discussion Papers 8906, C.E.P.R. Discussion Papers.
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-08-23 (All new papers)
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