Paper No. 46, Jun 2007

 

MAS Staff Paper No. 46, Jun 2007

FERTILITY & THE REAL EXCHANGE RATE

By Andrew K. Rose and Saktiandi Supaat


 

 

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.

 

This paper can be downloaded in PDF format To Download Pdf File Click Here(PDF, 836KB)

and can be viewed and printed with Adobe's Acrobat(TM) Reader To get Acorbat Reader

Last Modified on 26/11/2016