The Effect of Real Exchange Rate on Unemployment PDF Download
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Author: Zahra Bakhshi
Publisher:
ISBN:
Category :
Languages : en
Pages : 10
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Book Description
Unemployment is one of the problems that global economics, especially the economy of developing countries such as Iran is faced with. Therefore, there have been many studies to investigate the variables which affect unemployment in macroeconomics. Considering exchange rate volatility in recent years which have affected most of major variables of economy in Iran, this study tried to investigate the relationship between exchange rate and unemployment in Iran using the annual data of 30 years (from 1981 to 2012). To achieve the objectives of the study, autoregressive econometric model with distributed lag was used to assess the relationship between real exchange rate and unemployment. This model consisted of five main variables, namely unemployment rate, exchange rate, export, import, and gross domestic product. The results of the study demonstrated that economic growth had a significant and positive effect on unemployment. In addition, it was shown that there was a negative relationship between unemployment and exchange rate.
Author: Zahra Bakhshi
Publisher:
ISBN:
Category :
Languages : en
Pages : 10
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Book Description
Unemployment is one of the problems that global economics, especially the economy of developing countries such as Iran is faced with. Therefore, there have been many studies to investigate the variables which affect unemployment in macroeconomics. Considering exchange rate volatility in recent years which have affected most of major variables of economy in Iran, this study tried to investigate the relationship between exchange rate and unemployment in Iran using the annual data of 30 years (from 1981 to 2012). To achieve the objectives of the study, autoregressive econometric model with distributed lag was used to assess the relationship between real exchange rate and unemployment. This model consisted of five main variables, namely unemployment rate, exchange rate, export, import, and gross domestic product. The results of the study demonstrated that economic growth had a significant and positive effect on unemployment. In addition, it was shown that there was a negative relationship between unemployment and exchange rate.
Author: Mark Patrick Moore
Publisher:
ISBN:
Category :
Languages : en
Pages : 54
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Book Description
Author: Reva Krieger
Publisher:
ISBN:
Category : Employment (Economic theory)
Languages : en
Pages : 60
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Book Description
Author: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 1455210781
Category : Business & Economics
Languages : en
Pages : 34
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Book Description
We review the literature on Dutch disease, and document that shocks that trigger foreign exchange inflows (such as natural resource booms, surges in foreign aid, remittances, or capital inflows) appreciate the real exchange rate, generate factor reallocation, and reduce manufacturing output and net exports. We also observe that real exchange rate misalignment due to overvaluation and higher volatility of the real exchange rate lower growth. Regarding the effect of undervaluation of the exchange rate on economic growth, the evidence is mixed and inconclusive. However, there is no evidence in the literature that Dutch disease reduces overall economic growth. Policy responses should aim at adequately managing the boom and the risks associated with it.
Author: Majed El-Helou
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
The issue to be examined is whether flexible exchange rates result in less variability in GDP and unemployment rates. Basically, with a fixed exchange rate governments cannot allow the exchange rate to fluctuate in response to external shocks to the economy, nor are they as able to use monetary and/or fiscal policy to respond to external shocks. Since an external shock cannot be accommodated by a nominal change in the exchange rate or through monetary policy, such shocks must be accommodated by changes in real economic activity, i.e., changes in GDP and unemployment. With a flexible exchange rate, an external shock can be accommodated by a change in the exchange rate, or through monetary and/or fiscal policy and should thus have less impact on unemployment and GDP. This hypothesis is theoretically studied and explained more widely in the thesis and is tested with the data available.
Author: Ms.Prachi Mishra
Publisher: International Monetary Fund
ISBN: 1451871929
Category : Business & Economics
Languages : en
Pages : 44
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Book Description
We analyze how the pass-through from exchange rate to domestic wages depends on the degree of integration between domestic and foreign labor markets. Using data from 66 countries over the period 1981–2005, we find that the elasticity of domestic wages to real exchange rate is 0.1 after a year for countries with high barriers to external labor mobility, but about 0.4 in countries with low barriers to mobility. The results are robust to the inclusion of various controls, different measures of exchange rates, and concepts of labor market integration. These findings call for including labor mobility in macro models of external adjustment.
Author: Hans Lindblad
Publisher:
ISBN:
Category :
Languages : en
Pages : 50
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Book Description
A common assumption when analysing unemployment is that the economy is closed. However, the equilibrium rate of unemployment is not identified in an open economy unless the foreign sector is modeled. Therefore we set up and estimate a structural unobserved components open economy model for the unemployment rate and the real exchange rate. This approach enables us to simultaneously determine changes in both cyclical and equilibrium rates in these two variables. The results indicate that the dramatic changes in the Swedish unemployment rate during the 1990s is mainly a cyclical phenomenon. The development of the exchange rate is mainly driven by terms of trade and government deficits.
Author: Karl Brunner
Publisher:
ISBN:
Category : Circular velocity of money
Languages : en
Pages : 472
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Book Description
Author: Martin Weale
Publisher: Routledge
ISBN: 1317379438
Category : Business & Economics
Languages : en
Pages : 403
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Book Description
This analysis of macroeconomic policy, originally published in 1989, argues that key government objectives, such as reduced inflation, decreased unemployment and an adequate level of national saving can be achieved only by employing both monetary and fiscal policies, in conjunction with supply-side policies expressly designed to improve the workings of the labour market. Part 1 is a comparative analysis showing the effects of monetary and fiscal policy on the economy. Real-wage rigidity in the labour market is shown to have important consequences for the working of both types of policy, because it conditions the economy’s response to tax changes. Part 2 presents an econometric model which combines consistent stock-flow accounts with a full range of expectational effects. Part 3 presents an innovative technique for solving rational expectations models with the need for arbitary terminal conditions.
Author: Christopher L. House
Publisher:
ISBN:
Category : Foreign exchange rates
Languages : en
Pages : 40
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Book Description
We exploit differences across U.S. states in terms of their exposure to trade to study the effects of changes in the exchange rate on economic activity at the business cycle frequency. We find that a depreciation in the state-specific trade-weighted real exchange rate is associated with an increase in exports, a decline in unemployment and an increase in hours worked. The effect is particularly strong in periods of economic slack. We develop a multi-region model with inter-state trade and labor flows and calibrate it to match the state-level orientation of exports and the extent of labor migration and trade between states. The model replicates the relationship between exchange rates and unemployment. Counterfactuals show that the high degree of interstate trade plays a dominant role in transmitting shocks across states in the first year, whereas interstate migration shapes cross-sectional patterns in following years. The model suggests that a 25% Chinese import tariff on U.S. goods would be felt throughout the United States, even in states with small direct linkages to China, raising unemployment rates by 0.2 to 0.7 percentage points in the short run.
