Bilateral exchange rates and jobs

Bekkers, Eddy Henricus; Francois, Joseph (2014). Bilateral exchange rates and jobs. Review of International Economics, 22(2), pp. 275-298. B. Blackwell 10.1111/roie.12107

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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 balance.

Item Type:

Journal Article (Original Article)


03 Faculty of Business, Economics and Social Sciences > Other Institutions > Teaching Staff, Faculty of Business, Economics and Social Sciences
02 Faculty of Law > Department of Economic Law > World Trade Institute
10 Strategic Research Centers > World Trade Institute

02 Faculty of Law > Department of Economic Law > NCCR International Trade Regulation

UniBE Contributor:

Bekkers, Eddy Henricus and Francois, Joseph


300 Social sciences, sociology & anthropology > 340 Law
300 Social sciences, sociology & anthropology > 380 Commerce, communications & transportation
300 Social sciences, sociology & anthropology > 330 Economics




B. Blackwell




Dino Collalti

Date Deposited:

16 Mar 2015 14:48

Last Modified:

12 Nov 2019 15:13

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