Aggregate and sector-specific exchange rate indexes for the Portuguese economy

• Author(s): Alexandre, Fernando ; Bação, Pedro ; Cerejeira, João ; Portela, Miguel
• Date: 2009
• Persistent ID: http://hdl.handle.net/1822/12198
• Origin: RepositóriUM - Universidade do Minho
• Subject(s): Exchange rates; International trade; Employment; EMU
• Document Type: Article
• Language: English

Description

In this paper, we compute and compare aggregate and sector-specific exchange rate indexes for the Portuguese economy. We find that alternative effective exchange rate indexes are very similar between them. We also find that sector-specific effective exchange rates are strongly correlated with aggregate indexes. Nevertheless, we show that sector-specific exchange rates are more informative than aggregate exchange rates in explaining changes in employment: whereas aggregate indexes are statistically insignificant in employment equations, regressions using sector-specific exchange rate indexes show a statistically significant and economically large effect of exchange rates on employment.