Eddy Bekkers, Joseph Francois,
"Bilateral Exchange Rates and Jobs"
, in Review of International Economics, Vol. 22, Nummer 2, Seite(n) 275?298, 5-2014
Bilateral Exchange Rates and Jobs
Sprache des Titels:
We study the labor market effects of realignment in fixed bilateral exchange rates, such as China?s peg to
the US dollar.We employ the open economy model by de Melo and Robinson to identify the core parameters
of the real, trade side of the economy driving the unemployment effects of bilateral exchange rate realignment.
A small open economy version of the model is explored analytically and a large multicountry
version numerically. Analytics in the small open economy model show that unemployment effects of adjusting
of a bilateral peg 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
revaluation of a trading partner?s currency has beneficial effects. Numerics in the large economy model
show that Chinese revaluation can generate both positive and negative unemployment effects depending
upon underlying parameter values. Adverse unemployment effects can go along with an improving trade