Dollar Appreciation and Manufacturing Employment and Output

25 Pages Posted: 12 Apr 2004

See all articles by William H. Branson

William H. Branson

Princeton University - Woodrow Wilson School of Public and International Affairs; National Bureau of Economic Research (NBER)

James P. Love

Independent

Date Written: July 1986

Abstract

This paper examines the impact of the movements in the real exchange rate on employment and output in U.S. manufacturing industries. We use a simple model of supply and demand to estimate the elasticity of manufacturing employment and outputwith respect to the real exchange rate, at different levels of aggregation. The data are quarterly, covering two time periods -- 1963:1 to 1985:1 and 1972:1 to 1985:1. The employment estimates include 20 manufacturing sectors at the 2-digit SIC level, 125sectors at the 3-digit SIC level, 176 sectors at the 4-digit SIC level. In addition, we disaggregate manufacturing employment regionally by the 50 states plus the District of Columbia. The output estimates include 80 sectors of industrial production at different levels of aggregation. We check for consistency by considering the impact of aggregation among the 2-,3-, and 4-digit employment estimates, and by comparing the estimates for employment to those for output. We find that exchange rate movements have had important effects on the manufacturing sector, and in particular, the durable goods sector, including primary metals, fabricated metal products, and non-electrical machinery. Other sectors that suffer large employment loses when the dollarappreciates are stone, clay and glass products, transportation, instruments, textiles and apparel, chemicals, rubber and leather goods.

Suggested Citation

Branson, William H. and Love, James P., Dollar Appreciation and Manufacturing Employment and Output (July 1986). NBER Working Paper No. w1972. Available at SSRN: https://ssrn.com/abstract=344783

William H. Branson (Contact Author)

Princeton University - Woodrow Wilson School of Public and International Affairs ( email )

409 Robertson Hall
Princeton, NJ 08544-1021
United States
609-258-4828 (Phone)
609-258-5533 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

James P. Love

Independent

No Address Available

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