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Exchange Rate Fluctuations and Labour Market Adjustments in Canadian Manufacturing Industries

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  • Gabriel Bruneau
  • Kevin Moran

Abstract

We estimate the link between exchange rate fluctuations and the labour input of Canadian manufacturing industries. The analysis is based on a dynamic model of labour demand, and the econometric strategy employs a panel two-step approach for cointegrating regressions. Our data are drawn from a panel of 20 manufacturing industries from the KLEMS database and cover a long sample period that includes two full cycles of appreciation and depreciation of the Canadian dollar. Our results indicate that exchange rate fluctuations have significant long-term effects on the labour input of Canada’s manufacturing industries, that these effects are stronger for trade-oriented industries, and that these long-term impacts materialize only gradually following shocks.

Suggested Citation

  • Gabriel Bruneau & Kevin Moran, 2015. "Exchange Rate Fluctuations and Labour Market Adjustments in Canadian Manufacturing Industries," Staff Working Papers 15-45, Bank of Canada.
  • Handle: RePEc:bca:bocawp:15-45
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    Cited by:

    1. Gabriel Bruneau & Kevin Moran, 2017. "Exchange rate fluctuations and labour market adjustments in Canadian manufacturing industries," Canadian Journal of Economics, Canadian Economics Association, vol. 50(1), pages 72-93, February.
    2. Mr. Itai Agur, 2016. "Products and Provinces: A Disaggregated Panel Analysis of Canada’s Manufacturing Exports," IMF Working Papers 2016/193, International Monetary Fund.
    3. Stephen Chan & Jeffrey Chu & Saralees Nadarajah & Joerg Osterrieder, 2017. "A Statistical Analysis of Cryptocurrencies," JRFM, MDPI, vol. 10(2), pages 1-23, May.

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    More about this item

    Keywords

    Econometric and statistical methods; Exchange rate regimes; Exchange rates; Labour markets; Recent economic and financial developments;
    All these keywords.

    JEL classification:

    • E - Macroeconomics and Monetary Economics
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F - International Economics
    • F1 - International Economics - - Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F3 - International Economics - - International Finance
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • J - Labor and Demographic Economics
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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