Regional Effects of Exchange Rate Fluctuations
| Autor: | Christopher L. House, Christian Proebsting, Linda L. Tesar |
|---|---|
| Rok vydání: | 2020 |
| Předmět: |
Economics and Econometrics
050208 finance Short run multicountry dsge model media_common.quotation_subject Labor migration Depreciation 05 social sciences Tariff Monetary economics exchange rates Exchange rate transmission across space Accounting 0502 economics and business Unemployment Economics Business cycle regional shocks 050207 economics China Finance media_common |
| Zdroj: | Journal of Money, Credit and Banking. 52:429-463 |
| ISSN: | 1538-4616 0022-2879 |
| Popis: | We exploit differences across U.S. states in terms of their exposure to trade to study the effects of changes in the exchange rate on economic activity at the business cycle frequency. We find that a depreciation in the state-specific trade-weighted real exchange rate is associated with an increase in exports, a decline in unemployment and an increase in hours worked. The effect is particularly strong in periods of economic slack. We develop a multi-region model with inter-state trade and labor flows and calibrate it to match the state-level orientation of exports and the extent of labor migration and trade between states. The model replicates the relationship between exchange rates and unemployment. Counterfactuals show that the high degree of interstate trade plays a dominant role in transmitting shocks across states in the first year, whereas interstate migration shapes cross-sectional patterns in following years. The model suggests that a 25% Chinese import tariff on U.S. goods would be felt throughout the United States, even in states with small direct linkages to China, raising unemployment rates by 0.2 to 0.7 percentage points in the short run. |
| Databáze: | OpenAIRE |
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