Effects of Asymmetric Adjustment Among Labor Productivity, Labor Demand, and Exchange Rate Using Threshold Cointegration Test

Shu-Chen Chang

Emerging Markets Finance and Trade, 2010, vol. 46, issue 6, 55-68

Abstract: This paper investigates the asymmetric equilibrium relationship among labor productivity, labor demand, and the exchange rate in Taiwan's manufacturing industry using a threshold cointegration test that allows asymmetric adjustment. The findings show that there is a temporal delay in the reaction of labor demand to change in labor productivity, and vice versa. However, a temporal impact of exchange rate shock on labor demand and labor productivity is statistically unobvious. A trade-off between productivity growth and employment growth is not found.

Keywords: momentum threshold autoregressive process; threshold autoregressive process; threshold error correction (search for similar items in EconPapers)
Date: 2010
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