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The Unemployment Effect of Exchange Rate Volatility in Industrial Countries

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  • Horst Feldmann

    (University of Bath)

Abstract

Using data on 17 industrial countries from 1982 to 2003 and controlling for a wide array of factors, this paper finds that higher exchange rate volatility increases the unemployment rate. The magnitude of the effect is small. The results are robust to variations in specification.

Suggested Citation

  • Horst Feldmann, 2011. "The Unemployment Effect of Exchange Rate Volatility in Industrial Countries," Department of Economics Working Papers 01/11, University of Bath, Department of Economics.
  • Handle: RePEc:eid:wpaper:24073
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    File URL: https://purehost.bath.ac.uk/ws/files/260824/0111.pdf
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    References listed on IDEAS

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    1. Darby, Julia, et al, 1999. "The Impact of Exchange Rate Uncertainty on the Level of Investment," Economic Journal, Royal Economic Society, vol. 109(454), pages 55-67, March.
    2. Ansgar Belke & Leo Kaas, 2004. "Exchange Rate Movements and Employment Growth: An OCA Assessment of the CEE Economies," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 31(2), pages 247-280, June.
    3. Belke, Ansgar & Gros, Daniel, 2002. "Monetary integration in the Southern Cone," The North American Journal of Economics and Finance, Elsevier, vol. 13(3), pages 323-349, December.
    4. Ansgar Belke & Daniel Gros, 2002. "Designing EU-US Atlantic Monetary Relations: Exchange Rate Variability and Labour Markets," The World Economy, Wiley Blackwell, vol. 25(6), pages 789-813, June.
    5. Ansgar Belke, 2005. "Exchange Rate Movements and Unemployment in the EU Accession Countries-A Panel Analysis," Review of Development Economics, Wiley Blackwell, vol. 9(2), pages 249-263, May.
    6. Ansgar Belke & Daniel Gros, 2001. "Real Impacts of Intra-European Exchange Rate Variability: A Case for EMU?," Open Economies Review, Springer, vol. 12(3), pages 231-264, July.
    7. Andrea Bassanini & Romain Duval, 2007. "The determinants of unemployment across OECD countries: Reassessing the role of policies and institutions," OECD Economic Studies, OECD Publishing, vol. 2006(1), pages 7-86.
    8. Andersen, Torben M. & Sorensen, Jan Rose, 1988. "Exchange rate variability and wage formation in open economies," Economics Letters, Elsevier, vol. 28(3), pages 263-268.
    9. Dixit, Avinash K, 1989. "Entry and Exit Decisions under Uncertainty," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 620-638, June.
    10. Goldberg, Linda S, 1993. "Exchange Rates and Investment in United States Industry," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 575-588, November.
    11. Hall, Peter A. & Franzese, Robert J., 1998. "Mixed Signals: Central Bank Independence, Coordinated Wage Bargaining, and European Monetary Union," International Organization, Cambridge University Press, vol. 52(03), pages 505-535, June.
    12. Claudia Stirböck & Herbert Buscher, 2000. "Exchange rate volatility effects on labour markets," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 35(1), pages 9-22, January.
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    Cited by:

    1. F. V. Vieira & M. Holland & C. Gomes da Silva & L. C. Bottecchia, 2013. "Growth and exchange rate volatility: a panel data analysis," Applied Economics, Taylor & Francis Journals, vol. 45(26), pages 3733-3741, September.
    2. Christoph S. Weber, 2017. "The Unemployment Effect of Central Bank Transparency," Working Papers 172, Bavarian Graduate Program in Economics (BGPE).
    3. repec:gam:jecomi:v:6:y:2018:i:3:p:49-:d:168120 is not listed on IDEAS
    4. Aderbal Oliveira Damasceno & Flávio Vilela Vieir, 2014. "Desalinhamento Cambial, Volatilidade Cambial E Crescimento Econômico: Uma Análise Para A Economia Brasileira (1995-2011)," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41st Brazilian Economics Meeting] 100, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].

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    Keywords

    unemployment; exchange rate volatility;

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