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Does Strong Employment Support Strong National Currency? An Empirical Analysis for the US Economy

In: New Trends in Finance and Accounting

Author

Listed:
  • Elvan Akturk Hayat

    (Adnan Menderes University)

  • Ismet Gocer

    (Adnan Menderes University)

Abstract

Nowadays, the currency wars between the US and China gets accelerated and economic and politic developments in countries’ have important effects on the value of national currencies. Employment, manufacturing, and economic growth data of leading countries like the US is closely monitored by the whole world. When non-farm payroll data of the US, announced at first Friday of every month, is above expectations, it is accepted as an indicator that the US economy is getting better, manufacturing and economic growth will be higher in future, and dollar appreciates against other currencies. In this study, the relation between the non-farm payroll employment (NFE) and dollar index (DI) data of the US is analyzed by econometric methods for the period of 1995:M01-2016:M01. The results of the study indicate that there is one-way causality from non-farm payroll employment to dollar index and non-farm payroll employment and dollar index are cointegrated in the long term. Besides, a 1% increases in non-farm payroll data causes dollar index to increase by 2.14%. Error correction mechanism of the model also operates. This study is evaluated to be useful for the policy makers in both developed and developing countries by drawing attention on this issue once again.

Suggested Citation

  • Elvan Akturk Hayat & Ismet Gocer, 2017. "Does Strong Employment Support Strong National Currency? An Empirical Analysis for the US Economy," Springer Proceedings in Business and Economics, in: David Procházka (ed.), New Trends in Finance and Accounting, chapter 0, pages 29-39, Springer.
    • Handle: RePEc:spr:prbchp:978-3-319-49559-0_3
    DOI: 10.1007/978-3-319-49559-0_3
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