Exchange Rate Uncertainty and Employment Dynamics: Evidence from India

36 Pages Posted: 5 May 2016  

Anubha Dhasmana

Indian Institute of Management (IIMB), Bangalore

Date Written: May 5, 2016

Abstract

This paper studies the impact of real exchange rate volatility on firm level employment using a dynamic panel data model applied on a panel of 700 Indian manufacturing firms. Real exchange rate volatility is found to have a significant and negative impact on firm level employment growth. Access to domestic equity finance is found to reduce the negative impact of exchange rate uncertainty significantly but the same cannot be said about foreign equity finance. Further, exposure to international trade in the form of exports and imports affects employment dynamics in the face of exchange rate uncertainty.

Keywords: Real Exchange Rate Volatility, Trade Exposure, Employment

JEL Classification: F1, F4

Suggested Citation

Dhasmana, Anubha, Exchange Rate Uncertainty and Employment Dynamics: Evidence from India (May 5, 2016). IIM Bangalore Research Paper No. 513. Available at SSRN: https://ssrn.com/abstract=2775559

Anubha Dhasmana (Contact Author)

Indian Institute of Management (IIMB), Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India

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