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

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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Year of publication:	2004
Authors:	Belke, Ansgar ; Setzer, Ralph
Publisher:	Bonn : Institute for the Study of Labor (IZA)
Subject:	Wechselkurs \| Volatilität \| Wechselkurssystem \| Europäische Wirtschafts- und Währungsunion \| Beschäftigungseffekt \| Arbeitsmarktflexibilisierung \| Schätzung \| Osteuropa \| Central and Eastern Europe \| currency union \| euroization \| exchange rate variability \| job creation

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Series:	IZA Discussion paper series ; 1038
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	380020254 [GVK] hdl:10419/20273 [Handle]
Classification:	P27 - Performance and Prospects ; J32 - Nonwage Labor Costs and Benefits; Private Pensions ; F36 - Financial Aspects of Economic Integration
Source:	EconStor