Fertility and the Real Exchange Rate

35 Pages Posted: 23 May 2008

See all articles by Andrew Kenan Rose

Andrew Kenan Rose

University of California - Haas School of Business; NUS Business School; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Saktiandi Supaat

Government of the Republic of Singapore - Monetary Authority of Singapore (MAS)

Multiple version iconThere are 2 versions of this paper

Date Written: May 2007

Abstract

We use a quinquennial data set covering 87 countries between 1975 and 2005 to investigate the relationship between fertility and the real effective exchange rate. Theoretically a country experiencing a decline in its fertility rate can be expected to have higher savings, lower investment, a current account surplus, and accordingly a real depreciation. We test and confirm this hypothesis, controlling for a host of potential determinants such as PPP deviations and the Balassa-Samuelson effect. We find a statistically significant and robust link between fertility and the exchange rate. Our point-estimate is that a decline in the fertility rate of one child per woman is associated with a depreciation of approximately .15% in the real effective exchange rate.

Keywords: cross-country, data, demographic, effective, empirical, multilateral, panel

JEL Classification: F32, J13

Suggested Citation

Rose, Andrew Kenan and Rose, Andrew Kenan and Supaat, Saktiandi, Fertility and the Real Exchange Rate (May 2007). CEPR Discussion Paper No. DP6312, Available at SSRN: https://ssrn.com/abstract=1136619

Andrew Kenan Rose (Contact Author)

University of California - Haas School of Business ( email )

Berkeley, CA 94720
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510-642-4700 (Fax)

HOME PAGE: http://faculty.haas.berkeley.edu/arose

NUS Business School ( email )

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National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

Saktiandi Supaat

Government of the Republic of Singapore - Monetary Authority of Singapore (MAS) ( email )

10 Shenton Way #18-00
MAS Building
Singapore, 079117
Singapore

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