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Real exchange rates and skills

Abstract : Recent developments in trade theory strongly emphasize that international trade requires an intensive use of skilled workers. Against this background, we explore in this paper whether labor skills are a key determinant of real exchange rates in the long run. Using panel regressions covering 22 countries over the period 1950–2010, we find that labor skills are indeed a structural determinant of real exchange rates, with a permanent increase of the skilled–unskilled labor ratio leading to a long-run appreciation of the real exchange rate. This finding is robust to the inclusion of several control variables, like those used in traditional analyses of real exchange rates.
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Contributor : Jean-Francois Carpantier Connect in order to contact the contributor
Submitted on : Friday, June 22, 2018 - 12:09:33 PM
Last modification on : Thursday, July 14, 2022 - 4:07:39 AM




Vincent Bodart, Jean-François Carpantier. Real exchange rates and skills. Journal of International Money and Finance, 2016, 67 (C), pp.305-319. ⟨10.1016/j.jimonfin.2015.0⟩. ⟨hal-01821128⟩



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