Currency Crises and the Labour Share

Maarek, Paul; Orgiazzi, Elsa

doi:10.1111/ecca.12024

Cited by 16 publications

(14 citation statements)

References 42 publications

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“…Using a large panel of countries, Diwan () shows that currency crises are associated with a strong fall in the labour share. Maarek and Orgiazzi () find similar results using a panel of manufacturing sectors in 20 advanced economies. On average, they find that currency crises reduce the labour share by 2 percentage points, and this effect comes mainly from within manufacturing sectors changes.…”

Section: Measuring the Reverse Impact Of Finance On Inequalitymentioning

confidence: 63%

“…Most studies concur about an increase in both income and functional inequality (i.e. a decrease in the labour share) following a financial crisis (Baldacci et al ., ; Maarek and Orgiazzi, ; Meyer and Sullivan, ). Fiscal consolidation may also play a nonnegligible role in this negative distributional impact (see among others, Ball et al ., ).…”

Section: Introductionmentioning

confidence: 99%

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The Circular Relationship Between Inequality, Leverage, and Financial Crises

Bazillier

Hericourt

2016

Journal of Economic Surveys

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In this paper, we put into perspective the recent literature which points to inequality as a possible cause of credit bubbles, by reintegrating it into a more general analysis on the two‐way relationship between inequality and finance. We focus more specifically on situations where high inequalities and widespread access to credit coexist, and argue that, even when institutions maintain more or less equal access to finance, there may be a dynamic, positive circular relationship between inequality and financial development. However, even if there is some evidence in the literature of a positive causal impact of inequality on credit, this does not preclude other important, cofounding factors. The conclusions concerning the distributional impact of finance are more ambiguous. A survey of the empirical literature highlights several issues that must be tackled. First, endogeneity: reverse causality and coincidental factors are major concerns. Second, the choice of consistent measurements for the key variables (both credit and inequality) has strong empirical implications, and must be grounded on relevant theoretical channels. Third, those circular dynamics have substantial policy implications for emerging economies, since an increasing number face a joint increase in inequality and credit.

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Section: Measuring the Reverse Impact Of Finance On Inequalitymentioning

confidence: 63%

Section: Introductionmentioning

confidence: 99%

The Circular Relationship Between Inequality, Leverage, and Financial Crises

Bazillier

Hericourt

2016

Journal of Economic Surveys

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“…The author suggests that this is because the currency crisis triggers a change in the structure of the power relations between labour and capital but offers no theoretical model in support of this view. A more recent study by Maarek/Orgiazzi (2013) on 82 currency crises in 20 countries starting from the 1980s, focusing exclusively on the manufacturing sector, reveals a drop in the manufacturing wage share in 72 per cent of the cases examined. The decrease is of 2.4 per cent 3 years after the outbreak of the crisis, with a peak of 2.9 per cent between the second and third years.…”

Section: Currency Regime Crises and Devaluation: An Overview Of The Ementioning

confidence: 96%

“…6 Diwan (1999) adopts the definition put forward by Frankel/ Rose (1995), according to which a currency crisis takes place when the nominal exchange rate with respect to the dollar falls by over 25 per cent in a year. Maarek/Orgiazzi (2013) prefer the definition of Kaminsky/Reinhart (1999), which takes into consideration not only devaluation but also variations in currency reserves.…”

Section: Selection Of the Data Sources And Samplementioning

confidence: 99%

“…where a i are country-fixed effects, Cr t+j (j = 0, ... , 5) crisis dummies that assume a unitary value j years after devaluation takes place, $ g is the rate of variation of the nominal exchange rate with respect to the dollar, ω g is the rate of variation of real wages, and ω g S the rate of variation of the wage share. With respect to the procedure adopted by Maarek/Orgiazzi (2013), our analysis is confined to the objective of establishing whether the crisis coincided with significant change in the dynamics of real wages and the wage share in the cases considered. For this reason, the only explanatory variable included in the equations estimated is the rate of variation of the nominal exchange rate with respect to the US dollar.…”

Section: Currency Regime Crises Real Wages and The Wage Share: Some mentioning

confidence: 99%

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Currency regime crises, real wages, functional income distribution and production

Brancaccio

Garbellini

2015

EJEEP

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This study examines 28 selected cases of transition from a fixed to a more flexible exchange rate combined with devaluation over the period 1980-2013. The crises examined generally prove to be significantly correlated to a reduction in real wages and the wage share. However, both groups are also characterised by an important degree of variability with respect to sample averages, which suggests that the dynamics of real wages and wage shares were also influenced by the specific institutional and political environments in which such crises and devaluations took place. Finally, there appear to be no adequate empirical grounds for the claim that a decrease in real wages resulting from a currency regime crisis will result in improved levels of production and employment. All evaluations of the links between the currency regime and the dynamics of wages and distribution should in any case be carried out not in abstract terms but by comparing the possible implications of abandoning the regime with those of maintaining it. The opportunity of a comparative analysis also applies to the study of current episodes, such as the eurozone crisis. operation has been repeated, taking into account the episodes amongst these for which the relevant data are available. (The figures are missing for real wages in Ecuador and real wages and the wage share in Hungary for the years before 1995.). 11. More specifically, the tests performed suggested that, in all three country groups, equation (3) must include the contemporary rate of growth of GDP. By contrast, in equation (4) the growth rate of GDP can be explained by its own lagged value and by the contemporary growth rate of real wages. Currency regime crises, real wages, functional income distribution and production 269

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Currency crises and dynamics of real wages

Teimouri

2015

Rev World Econ

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Currency Crises and the Labour Share

Cited by 16 publications

References 42 publications

The Circular Relationship Between Inequality, Leverage, and Financial Crises

The Circular Relationship Between Inequality, Leverage, and Financial Crises

Currency regime crises, real wages, functional income distribution and production

Currency crises and dynamics of real wages

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