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An International Comparison of Employment Adjustment to Exchange Rate Fluctuations

  • Simon Burgess
  • Michael M. Knetter

This paper evaluates the response of employment to exchange rate shocks at the industry level for the G-7 countries. Using a simple empirical framework that places little a priori structure on the pattern of response to shocks, we find the data are consistent with the view that employment in European industries, at least France and Germany, is much less influenced by exchange rate shocks and much slower to adjust to long run steady states. The United States, Japan, Canada, the United Kingdom and Italy all appear to adjust more quickly. German and Japanese employment are quite insensitive to exchange rate fluctuations, consistent with previous research on output and markup responses to exchange rates.

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File URL: http://www.nber.org/papers/w5861.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5861.

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Date of creation: Dec 1996
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Publication status: published as Review of International Economics (February 1998): 151-163.
Handle: RePEc:nbr:nberwo:5861
Note: IFM ITI
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  1. Berman, Eli & Bound, John & Machin, Stephen, 1997. "Implications of Skill-Biased Technological Change: International Evidence," Working Paper Series 486, Research Institute of Industrial Economics.
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  9. Catherine L. Mann, 1986. "Prices, profit margins, and exchange rates," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jun, pages 366-379.
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  11. Edward E. Leamer, 1996. "In Search of Stolper-Samuelson Effects on U.S. Wages," NBER Working Papers 5427, National Bureau of Economic Research, Inc.
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  13. William H. Branson & Richard C. Marston, 1989. "Price and Output Adjustment in Japanese Manufacturing," NBER Working Papers 2878, National Bureau of Economic Research, Inc.
  14. Marston, Richard C., 1990. "Pricing to market in Japanese manufacturing," Journal of International Economics, Elsevier, vol. 29(3-4), pages 217-236, November.
  15. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173, March.
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  17. Feinberg, Robert M, 1989. "The Effects of Foreign Exchange Movements on U.S. Domestic Prices," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 505-11, August.
  18. Paul Krugman, 1986. "Pricing to Market when the Exchange Rate Changes," NBER Working Papers 1926, National Bureau of Economic Research, Inc.
  19. Knetter, Michael M, 1989. "Price Discrimination by U.S. and German Exporters," American Economic Review, American Economic Association, vol. 79(1), pages 198-210, March.
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