Structural real exchange rate and unemployment interdependencies in Argentina
Eric Pentecost
Fernando Zarzosa Valdivia
2134/21573
https://repository.lboro.ac.uk/articles/journal_contribution/Structural_real_exchange_rate_and_unemployment_interdependencies_in_Argentina/9493814
Based on a three-sector, micro-founded model of a small open economy, this paper investigates the interdependences between the structural real exchange rate (defined as the relative prices tradable to non-tradable goods prices) and the unemployment rate with an application to Argentina. The empirical results suggest a significant, negative relationship between the structural real exchange rate and the rate of unemployment, suggesting that an appreciating real exchange rate may lead to Dutch disease effects – which effectively contract the size of the manufacturing sector – and damage long-term growth and employment opportunities.
2016-06-10 08:45:27
Structural real exchange rate
Unemployment rate
Factor productivity
Capital endowments
Terms of trade
Economics not elsewhere classified