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Dollar depreciations and monthly local employment in three Midwestern states: Evidence from time-series and cointegration analysis

Author

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  • Scott W Hegerty

    (Northeastern Illinois University)

Abstract

As local exports grow globally, it is important for policymakers to understand the role that exchange rates play on local employment. Using current data, this study first examines business-cycle concordance and synchronization and finds that there is relatively weak correlation between local employment either with cities' small neighbors or their states' major metropolis. There are, however, stronger connections to the dollar real effective exchange rate. When we apply Dynamic Ordinary Least Squares in a Seemingly Unrelated Regressions framework to a reduced-form model, we find that most cities, including the major metro areas, do indeed see increased employment following a dollar depreciation. Those cities that do not experience these effects have employment mixes that rely less on manufacturing. These include state capitals, medical centers, and university hubs. Only the results for a trio of medium-sized manufacturing cities in Wisconsin are more difficult to explain, suggesting that further research is necessary.

Suggested Citation

  • Scott W Hegerty, 2015. "Dollar depreciations and monthly local employment in three Midwestern states: Evidence from time-series and cointegration analysis," Economics Bulletin, AccessEcon, vol. 35(1), pages 291-297.
  • Handle: RePEc:ebl:ecbull:eb-14-00615
    as

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    References listed on IDEAS

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    Cited by:

    1. Scott W Hegerty, 2015. "Employment Cycle Co-Movements and Economic Integration Between Milwaukee and Chicago," Economics Bulletin, AccessEcon, vol. 35(4), pages 2776-2785.

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    More about this item

    Keywords

    Employment; Wisconsin; Illinois; Minnesota; Exchange Rates; Time Series;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General

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