How labor market institutions influence the relationship between exchange rate regimes and economic growth

Vytautas Kuokštis; Muhammad Asali; Simonas Algirdas Spurga

doi:10.1371/journal.pone.0332492

How labor market institutions influence the relationship between exchange rate regimes and economic growth

Vytautas Kuokštis^*
, Muhammad Asali
, Simonas Algirdas Spurga

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

Abstract

How do exchange rate regimes affect economic growth? Although this topic has attracted considerable empirical attention, a definitive answer remains elusive. This study aims to advance our understanding by examining how labor market flexibility affects the link between exchange rate regimes and growth. Using a panel of 194 countries from 1970 to 2019, we find that in developing economies, fixed exchange rate regimes hinder growth when labor markets are highly rigid but boost growth when labor markets are highly flexible. We also demonstrate that this relationship varies depending on which labor market flexibility indicator is used, reflecting the differences in each measure’s geographic and temporal coverage.

Original language	English
Article number	e0332492
Journal	PLoS ONE
Volume	20
Issue number	9 September
DOIs	https://doi.org/10.1371/journal.pone.0332492
State	Published - Sep 2025
Externally published	Yes

Bibliographical note

Publisher Copyright:
© 2025 Kuokštis et al. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 8 Decent Work and Economic Growth

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10.1371/journal.pone.0332492

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How labor market institutions influence the relationship between exchange rate regimes and economic growth

Abstract

Bibliographical note

UN SDGs

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