Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/203948 
Year of Publication: 
2012
Series/Report no.: 
wiiw Working Paper No. 83
Publisher: 
The Vienna Institute for International Economic Studies (wiiw), Vienna
Abstract: 
We study the labour market effects of bilateral exchange rate realignment. We place emphasis on the composition of trade, the role of intermediates, and the underlying conditions of the labour market. Employment effects hinge on the fraction exported to and imported from the trading partner. A larger fraction exported to and a smaller fraction imported from the trading partner make it more likely that appreciation has beneficial effects. Furthermore, more sticky price expectations in wage formation, a smaller fraction of intermediates in the production process, and a lower rate of importer pass through make it more likely that appreciation of the exchange rate of the trade partner has positive employment effects. At a more technical level, the scope for substitution away from higher priced inputs, either towards other sources of supply, or towards value-added, is also important to the direction and magnitude of changes in employment.
Subjects: 
bilateral exchange rates
devaluation
exchange rates and trade
trade and employment
JEL: 
F32
F41
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.