It’s the Second Statistical Moment:A Survey on Exchange Rates and Labour Market Performance in Eastern Europe

This paper surveys earlier studies by the authors, which examine the specific costs and benefits to labour markets from suppressed exchange rate variability. These papers started from a simple model that explains the transmission channel between exchange rate volatility and the labour market and verify whether this model is applicable to the Central and Eastern European Countries. The findings of the panel analyses suggest that exchange rate variability had a statistically significant negative impact on the unemployment rate in these countries. Moreover, the studies surveyed in general confirm the expectation that economies with relatively closer ties with the euro zone would show a stronger impact of euro exchange rate variability.