Labor Market Implications ofSwitching the Currency Peg in a General Equilibrium Modelfor Lithuania

Pizzati, Lodovico

World Bank, Washington, D.C.

关键词: AGGREGATE CONSUMPTION;    AGGREGATE DEMAND;    AGGREGATE EXPORTS;    AGGREGATE IMPORTS;    AGRICULTURE;   

DOI  :  10.1596/1813-9450-2830
RP-ID  :  WPS2830

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

On February 2, 2002, Lithuania switchedits currency anchor from the dollar to the euro. Whilepegging to the dollar (since April 1994) has provensuccessful throughout the transition years, the recentdecision to peg to the euro was motivated by the increasingtrade relations with European economies. Pizzati does notargue which peg is more appropriate, but he analyzes theimplications of changing the exchange rate regime fordifferent sectors and labor groups. While pegging to theeuro entails more stability for the export sector, Lithuaniais still dependent on dollar-based imports of primary goodsfrom the Commonwealth of Independent States, more so thanother Baltic countries or Central European economies. Theauthor uses a multisector general equilibrium model tocompare the effects of dollar-euro exchange rate movementsunder these alternative pegs. Overall, simulation resultssuggest that while a euro-peg will provide more stability toGDP and employment, it will also imply more volatility inprices, suggesting that under the new peg macroeconomicpolicy should be more concerned with inflationary pressuresthan before. From a sector-specific perspective, pegging tothe euro will provide a more stable demand forunskilled-intensive manufacturing and commercial services.But other sectors, such as agriculture, will still face thesame vulnerability to exchange rate movements. This suggeststhat additional policy measures may be needed to compensatesector-specific divergences.