Aggregate and sector-specific exchange rate indexes for the Portuguese economy
Economic theory and empirical evidence suggest that fluctuations in exchange rates may have strong reallocation effects. Accession to the Exchange Rate Mechanism in 1992, and then to the European Monetary Union in 1999, implied a drastic change in the behaviour of Portugal's exchange rate indexes. The analysis of those indexes is therefore bound to play an important role in the study of the evolution of the Portuguese economy in the last two decades. However, there are many alternative exchange rate indexes. In this paper, we compute and compare aggregate and sector-specific exchange rate indexes for the Portuguese economy. We find that alternative effective exchange rate indexes are very similar between them. We also find that sector-specific effective exchange rates are strongly correlated with aggregate indexes. Nevertheless, we show that sector-specific exchange rates are more informative than aggregate exchange rates in explaining changes in employment: whereas aggregate indexes are statistically insignificant in employment equations, regressions using sector-specific exchange rate indexes show a statistically significant and economically large effect of exchange rates on employment.
|Date of creation:||May 2009|
|Date of revision:|
|Publication status:||Published in Notas Económicas 30: 6-28, 2009|
|Contact details of provider:|| Postal: |
Phone: + 351 239 790 500
Fax: +351 239 403511
Web page: http://www.uc.pt/en/feuc/gemf/
More information through EDIRC
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.:
- Amador, João & Cabral, Sónia & Ramos Maria, José, 2007.
"International Trade Patterns over the Last Four Decades: How does Portugal Compare with other Cohesion Countries?,"
5996, University Library of Munich, Germany.
- João Amador & Sónia Cabral & José R. Maria, 2007. "International Trade Patterns over the Last Four Decades: How does Portugal Compare with other Cohesion Countries?," Working Papers w200714, Banco de Portugal, Economics and Research Department.
- Herman Z. Bennett & Ziga Zarnic, 2008.
"International Competitiveness of the Mediterranean Quartet:A Heterogeneous-Product Approach,"
IMF Working Papers
08/240, International Monetary Fund.
- Herman Z Bennett & Ziga Zarnic, 2009. "International Competitiveness of the Mediterranean Quartet: A Heterogeneous-Product Approach," IMF Staff Papers, Palgrave Macmillan, vol. 56(4), pages 919-957, November.
- Jose Manuel Campa & Linda S. Goldberg, 1998.
"Employment versus Wage Adjustment and the US Dollar,"
NBER Working Papers
6749, National Bureau of Economic Research, Inc.
- Jose Manuel Campa & Linda S. Goldberg, 2001. "Employment Versus Wage Adjustment And The U.S. Dollar," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 477-489, August.
- Jose Manuel Campa & Linda S. Goldberg, 1998. "Employment versus wage adjustment and the U.S. dollar," Staff Reports 56, Federal Reserve Bank of New York.
- José Manuel Campa & Linda S. Goldberg, 1999. "Employment versus Wage Adjustment and the U.S. Dollar," Working Papers 99-07, New York University, Leonard N. Stern School of Business, Department of Economics.
- Bayoumi, Tamim & Jayanthi, Sarma & Lee, Jaewoo, 2006.
"New Rates from New Weights,"
CEPR Discussion Papers
5860, C.E.P.R. Discussion Papers.
- Manuel de Heredia Caldeira Cabral, 2008. "Export Diversification And Technological Improvement: Recent Trends In The Portuguese Economy," GEE Papers 0006, Gabinete de Estratégia e Estudos, Ministério da Economia e da Inovação, revised Apr 2008.
- Ekholm, Karolina & Moxnes, Andreas & Ulltveit-Moe, Karen Helene, 2012.
"Manufacturing restructuring and the role of real exchange rate shocks,"
Journal of International Economics,
Elsevier, vol. 86(1), pages 101-117.
- Ekholm, Karolina & Moxnes, Andreas & Ulltveit-Moe, Karen-Helene, 2008. "Manufacturing Restructuring and the Role of Real Exchange Rate Shocks," CEPR Discussion Papers 6904, C.E.P.R. Discussion Papers.
- Klein, Michael W. & Schuh, Scott & Triest, Robert K., 2003.
"Job creation, job destruction, and the real exchange rate,"
Journal of International Economics,
Elsevier, vol. 59(2), pages 239-265, March.
- Michael W. Klein & Scott Schuh & Robert K. Triest, 1999. "Job creation, job destruction, and the real exchange rate," Working Papers 99-11, Federal Reserve Bank of Boston.
- Michael W. Klein & Scott Schuh & Robert K. Triest, 2000. "Job Creation, Job Destruction, and the Real Exchange Rate," NBER Working Papers 7466, National Bureau of Economic Research, Inc.
- William H. Branson & James Love, 1988. "U.S. Manufacturing and the Real Exchange Rate," NBER Chapters, in: Misalignment of Exchange Rates: Effects on Trade and Industry, pages 241-276 National Bureau of Economic Research, Inc.
- Paulo Soares Esteves & Carolina Reis, 2006. "Measuring export competitiveness: revisiting the effective exchange rate weights for the euro area countries," Working Papers w200611, Banco de Portugal, Economics and Research Department.
- Luca Buldorini & Stelios Makrydakis & Christian Thimann, 2002. "The effective exchange rates of the euro," Occasional Paper Series 02, European Central Bank.
- Linda S. Goldberg, 2004. "Industry-specific exchange rates for the United States," Economic Policy Review, Federal Reserve Bank of New York, issue May, pages 1-16.
When requesting a correction, please mention this item's handle: RePEc:gmf:wpaper:2009-05. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sara Santos)
If references are entirely missing, you can add them using this form.