Exchange Rate Volatility and Employment Growth in Developing Countries: Evidence from Turkey
Firat Demir2010, RePEc: Research Papers in Economics
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Abstract
Employing a unique panel of 691 private firms that accounted for 26% of total valueadded in manufacturing in Turkey, the paper explores the impacts of exchange rate volatility on employment growth during the period of 1983 -2005. The empirical analysis using a variety of specifications, estimation techniques, and robustness tests suggests that exchange rate volatility has a statistically and economically significant employment growth reducing effect on manufacturing firms. Using point estimates, the results suggest that for an average firm a one standard deviation increase in real exchange rate volatility reduces employment growth in the range of 1.4 -2.1 percentage points.
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