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Title:Exchange Rate Volatility and Employment Growth : Empirical Evidence from the CEE Economies PDF Logo
Authors:Belke, Ansgar
Setzer, Ralph
Issue Date:2004
Series/Report no.:IZA Discussion paper series 1038
Abstract:According to the traditional 'optimum currency area' approach, not much will be lost from a very hard peg to a currency union if there has been little reason for variations in the exchange rate. This paper takes a different approach and highlights the fact that high exchange rate volatility may as well signal high costs for labor markets. The impact of exchange rate volatility on labor markets in the CEECs is analyzed, finding that volatility vis?- vis the euro significantly lowers employment growth. Hence, the elimination of exchange rate volatility could be considered as a substitute for a removal of employment protection legislation.
Subjects:Central and Eastern Europe
currency union
euroization
exchange rate variability
job creation
JEL:P27
J32
F36
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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