Exchange rate uncertainty and employment: An algorithm describing `play' (Q2739984)

The authors study the influence of the exchange rate uncertainty on the relationship between macroeconomic labor market variables. The non-linear dynamics resulting from implications of uncertainty on the shape and the location of the macro hysteresis loop and simple linear approximation of the macroeconomic play-dynamics are considered. The authors develop an algorithm describing linear play hysteresis and implement it into a regression framework. As an application, the exchange rate impacts on German employment under consideration of play effects are analyzed.