Fertility and the Real Exchange Rate

Andrew Rose () and Saktiandi Supaat

No 6312, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We use a quinquennial data set covering 87 countries between 1975 and 2005 to investigate the relationship between fertility and the real effective exchange rate. Theoretically a country experiencing a decline in its fertility rate can be expected to have higher savings, lower investment, a current account surplus, and accordingly a real depreciation. We test and confirm this hypothesis, controlling for a host of potential determinants such as PPP deviations and the Balassa-Samuelson effect. We find a statistically significant and robust link between fertility and the exchange rate. Our point-estimate is that a decline in the fertility rate of one child per woman is associated with a depreciation of approximately .15% in the real effective exchange rate.

Keywords: cross-country; data; demographic; effective; empirical; multilateral; panel (search for similar items in EconPapers)
JEL-codes: F32 J13 (search for similar items in EconPapers)
Date: 2007-05
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