Study of Effect of Exchange Rate Fluctuations on Production and Employment
Journal Title: Journal of Science and today’s world - Year 2016, Vol 5, Issue 9
Abstract
The present research aims at exploring the impact of exchange rate on production and employment using the extant data and statistics about exchange rates, national production and unemployment. As can be seen from the previous studies about the effects of exchange rate changes on production, it seems that the results obtained are controversial and mixing. The Marshall – Lerner condition makes it possible to investigate such an effect using elasticity of exports and imports.The raise of exchange rate is associated with the increase of net exports because it makes exports to be seemingly cheap and imports to be seemingly expensive. In the other hand, the increase of imported inputs prices reduces the total supply. The effect of devaluations of domestic currency thus depends on the total supply and demand changes. Research has shown that following the economic reform period (1990-2005), employment growth rate in export sector was much lower than before and unemployment rate also revealed an ascending trend during 2001-2010; and equalizing exchange rate policy resulted in turning down of employment.
Authors and Affiliations
Ahmad Saeidi
Keywords
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