Fertility and the Real Exchange Rate

Andrew Rose () and Saktiandi Supaat

No 13263, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: F32 J13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-mon and nep-rmg
Date: 2007-07
Note: AG IFM
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Working Paper: Fertility and the Real Exchange Rate (2007)
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