Exchange Rate Volatility and Employment Growth : Empirical Evidence from the CEE Economies

Arbeitspapier

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.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 1038

Classification and Topics

• Classification: Wirtschaft ; Socialist Systems and Transitional Economies: Performance and Prospects ; Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions ; Financial Aspects of Economic Integration
• Subject: Central and Eastern Europe ; currency union ; euroization ; exchange rate variability ; job creation ; Wechselkurs ; Volatilität ; Wechselkurssystem ; Europäische Wirtschafts- und Währungsunion ; Beschäftigungseffekt ; Arbeitsmarktflexibilisierung ; Schätzung ; Osteuropa

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Belke, Ansgar ; Setzer, Ralph
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/20273