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Exchange Rate Volatility Effects on the German Labour Market: A Survey of Recent Results and Extensions

Author

Listed:
  • Buscher, Herbert

    () (IWH Halle)

  • Mueller, Claudia

    (affiliation not available)

Abstract

In this paper, a survey on theoretically expected and empirically proved impacts of exchange rate volatility is given. With regard to the West German unemployment, the effects of volatility are empirically analyzed using three different volatility measures and four country groups. In autoregressive models, a significant disturbing impact of volatility can be found with annual data as well as with monthly data for the whole period. While this impact does not differ for the three volatility measures, it is, however, less strong when using the monthly data. Differentiating for different subperiods by use of the monthly data, the reported impact is stronger for relatively stable periods and country groups. When isolating the cyclical component of the unemployment rate, it can be demonstrated that the whole reported impact solely affects this component. In a dynamic Okun-type relation, an additional significant impact of volatility, however, cannot be proved for all subperiods.

Suggested Citation

  • Buscher, Herbert & Mueller, Claudia, 1999. "Exchange Rate Volatility Effects on the German Labour Market: A Survey of Recent Results and Extensions," IZA Discussion Papers 37, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp37
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Puhani, Patrick A., 1999. "Labour Mobility - An Adjustment Mechanism in Euroland?," IZA Discussion Papers 34, Institute for the Study of Labor (IZA).
    2. Ansgar Belke & Ralph Setzer, 2004. "Contagion, herding and exchange-rate instability — A survey," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 39(4), pages 222-228, July.
    3. Müller, Claudia & Buscher, Herbert S., 1999. "The impact of monetary instruments on shock absorption in EU-Countries," ZEW Discussion Papers 99-15, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    4. Shu-Chen Chang, 2010. "Effects of Asymmetric Adjustment Among Labor Productivity, Labor Demand, and Exchange Rate Using Threshold Cointegration Test," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 46(6), pages 55-68, November.
    5. Döpke, Jörg, 2001. "The "Employment Intensity" of Growth in Europe," Kiel Working Papers 1021, Kiel Institute for the World Economy (IfW).
    6. Patrick A. Puhani, 2001. "Labour Mobility: An Adjustment Mechanism in Euroland? Empirical Evidence for Western Germany, France and Italy," German Economic Review, Verein für Socialpolitik, vol. 2(2), pages 127-140, May.
    7. Shu-Chen Chang, 2010. "Effects of Asymmetric Adjustment Among Labor Productivity, Labor Demand, and Exchange Rate Using Threshold Cointegration Test," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 46(6), pages 55-68, November.

    More about this item

    Keywords

    European Monetary Union; exchange rate volatility; Okun's law; West German labour market;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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