Exchange Rates

Ceteris Paribus
The determinants for exchange rates are;
- If the demand for a nation's currency increases, that currency will appreciate.
- If the supply of a nation's currency decreases, taht currency will appreciate.
- If a nation's currency appreciates, some foreign currency will depreciate relative to it.

This means that in the years of 2002-2005, the Euro has appreciated relative to the RMB, or, the RMB has depreciated relative to the Euro.

From Unemployment to Investment

Since a relationship with unemployment will be rather hard to substantiate, I've decided that it might be better to look at investment into the Netherlands, more specifically perhaps, in the electronics area. Philips is a large Dutch electronics company. This could be a potential goldmine of economic theory.
Technically, when your currency is stronger, you are able to import more. Therefore you are able to buy more technology, and thus investment in Dutch Companies R&D departments should have increased.

MR WELKER!!! READ THIS!!!

Here we can see that the Euro has become stronger relative to the Chinese Yuan.The graph shows the value of the Chinese Yuan against 1 Euro in the last 5 years.

Netherlands Bureau for Economic Policy Analysis
Topic: press release
Number: 23
Date: March 21, 2006

(The three paragraphs cited do not necessarily come in order. Bold citations are present to emphasize information. They are not so in the original.)

Dutch economy is reviving thanks to more exports.....
CPB expects economic growth in the Netherlands to be 2.75% this year, accelerating to 3% in 2007. Exports will gain momentum as a result of growth recovery in Europe. Furthermore, the Dutch competitive position can improve somewhat, after five years of decline. Unit labour costs decrease faster than those of the competitors, thanks to the modest development of wages and the depreciation of the euro from $ 1.24 in 2005 to, on average, $ 1.20 this year and the next. Domestically produced exports will show the highest growth rate thus far in this decade. Partly as a result of the ascent of the Chinese economy in the world economy, re-exports will probably continue to grow by double digits. The value of re-exports will even surpass that of 'made in Holland' exports next year.

Unemployment has passed its top and decrease again
The number of people looking for a job has been declining steadily since the end of 2005.The number of jobs has also started growing again in the course of last year, especially because of a rise in the number of temporary workers. CPB expects employment to show a strong recovery this year and the next. As a result, unemployment will decrease by 115 000 jobs, to 5% of the labour force in 2007. This decrease is stronger next year than in 2006, because employment always reacts to production with some delay.

Purchasing power is picking up
After three years of a decline, purchasing power will probably show a positive development - at least on average: 1.5% in 2006 and 0.75% next year. Real wages are increasing and the burden on households will be eased this year. However, due to the new medical insurance system, differences in real net income development are substantial.

Interesting, but what does this all mean? Obviously we haven't covered exchange rates yet, but I can see that there may be a relationship between the increasing strength of the Euro and the decreasing unemployment in the Netherlands.

Ok, I think I got it now...

How about this as my topic:

Is there a relationship between the exchange rate of the Euro and the RMB, and the unemployment rate of the Netherlands, in the past 10 years?

specific? yes
interesting? yes
data exists? yes
could it work?

could it?

EE Topic: High Unemployment in Europe - Result of Deficient Aggregate Demand, or Socialist policies?

Mr Welker,
Shall I just do an extended essay looking into the cause for the high NRU of Europe? We already discussed it a little bit in class, and it seems really interesting.

No Nike

So Nike has decided to be secretive, and don't want to release their cost data to a student like me, doing a research paper.
I guess I'll try and see if my dad's company will do it. I think a business analysis is the best way to go.