The Effect of Real Exchange Rate Changes on Labour Productivity Growth

Gavin Murphy and Iulia Siedschlag ()

No WP439, Papers from Economic and Social Research Institute (ESRI)

Abstract: We examine the effect of changes in international competitiveness on labour productivity growth through three channels: (i) export, (ii) import, and (iii) import competition. Using micro data from the Irish manufacturing over the period 1995-2002, we account for firms' heterogeneity in their exposure to international competitive pressure. Our econometric estimates indicate that a real exchange rate appreciation had a negative effect on labour productivity growth once a firm's export exposure was greater than 14 per cent. When a firm's import exposure exceeded 33 per cent, a real exchange rate appreciation had a positive effect on labour productivity. An increase in import competition due to a real exchange rate appreciation had no effect on a firm's labour productivity growth.

Keywords: exchange/growth/Productivity/competitiveness/competition/data/manufacturing (search for similar items in EconPapers)
Date: 2012-08
New Economics Papers: this item is included in nep-eff and nep-opm
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Citations: View citations in EconPapers (1)

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