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Fertility and the Real Exchange Rate

Author

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  • Rose, Andrew K
  • Supaat, Saktiandi

Abstract

We use a quinquennial data set covering 87 countries between 1975 and 2005 to investigate the relationship between fertility and the real effective exchange rate. Theoretically a country experiencing a decline in its fertility rate can be expected to have higher savings, lower investment, a current account surplus, and accordingly a real depreciation. We test and confirm this hypothesis, controlling for a host of potential determinants such as PPP deviations and the Balassa-Samuelson effect. We find a statistically significant and robust link between fertility and the exchange rate. Our point-estimate is that a decline in the fertility rate of one child per woman is associated with a depreciation of approximately .15% in the real effective exchange rate.

Suggested Citation

  • Rose, Andrew K & Supaat, Saktiandi, 2007. "Fertility and the Real Exchange Rate," CEPR Discussion Papers 6312, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:6312
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Fidora, Michael & Giordano, Claire & Schmitz, Martin, 2017. "Real exchange rate misalignments in the euro area," Working Paper Series 2108, European Central Bank.
    2. Rod Tyers & Ying Zhang, 2014. "Real exchange rate determination and the China puzzle," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 28(2), pages 1-32, November.
    3. Konrad Adler & Christian Grisse, 2017. "Thousands of BEERs: Take your pick," Review of International Economics, Wiley Blackwell, vol. 25(5), pages 1078-1104, November.
    4. Montecino, Juan Antonio, 2015. "Capital controls and the real exchange rate: Do controls promote disequilibria?," UMASS Amherst Economics Working Papers 2015-02, University of Massachusetts Amherst, Department of Economics.
    5. Yin-Wong Cheung & Menzie Chinn & Eiji Fujii, 2009. "Pitfalls in Measuring Exchange Rate Misalignment," Open Economies Review, Springer, vol. 20(2), pages 183-206, April.
    6. Bodart, Vincent & Carpantier, Jean-François, 2016. "Real exchange rates and skills," Journal of International Money and Finance, Elsevier, vol. 67(C), pages 305-319.
    7. Kamrul Hassan & Ruhul Salim, 2011. "The linkage between relative population growth and purchasing power parity: Cross country evidence," International Journal of Development Issues, Emerald Group Publishing, vol. 10(2), pages 154-169, July.
    8. Yin-Wong Cheung & Menzie D. Chinn & Eiji Fujii, 2008. "Pitfalls in Measuring Exchange Rate Misalignment: The Yuan and Other Currencies," NBER Working Papers 14168, National Bureau of Economic Research, Inc.
    9. repec:spr:qualqt:v:51:y:2017:i:6:d:10.1007_s11135-016-0407-1 is not listed on IDEAS
    10. repec:bla:worlde:v:40:y:2017:i:6:p:1247-1263 is not listed on IDEAS
    11. Max Groneck & Christoph Kaufmann, 2014. "Relative Sectoral Prices and Population Ageing: A Common Trend," Working Paper Series in Economics 69, University of Cologne, Department of Economics.
    12. repec:bla:obuest:v:79:y:2017:i:3:p:319-347 is not listed on IDEAS

    More about this item

    Keywords

    cross-country; data; demographic; effective; empirical; multilateral; panel;

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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