Corporate Investment And The Real Exchange Rate PDF Download
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| Author | : Mai Chi Dao |
| Publisher | : International Monetary Fund |
| Total Pages | : 47 |
| Release | : 2017-08-04 |
| Genre | : Business & Economics |
| ISBN | : 1484313747 |
Download Corporate Investment and the Real Exchange Rate Book in PDF, ePub and Kindle
We examine the relationship between real exchange rate depreciations and indicators of firm performance using data for a sample of more than 30,000 firms from 66 (advanced and emerging market) countries over the 2000-2011 period. We show that depreciations boost profits, investment, and sales of firms that are more financially-constrained and have higher labor shares. These findings are consistent with the view that depreciations boost internal financing opportunities by reducing real wages, thereby spurring investment. We show that these effects on firm performance are enduring, including in the market valuation of firms.
| Author | : Steve Brito |
| Publisher | : International Monetary Fund |
| Total Pages | : 21 |
| Release | : 2018-05-10 |
| Genre | : Business & Economics |
| ISBN | : 1484356349 |
Download Real Exchange Rates, Economic Complexity, and Investment Book in PDF, ePub and Kindle
We show that the response of firm-level investment to real exchange rate movements varies depending on the production structure of the economy. Firms in advanced economies and in emerging Asia increase investment when the domestic currency weakens, in line with the traditional Mundell-Fleming model. However, in other emerging market and developing economies, as well as some advanced economies with a low degree of structural economic complexity, corporate investment increases when the domestic currency strengthens. This result is consistent with Diaz Alejandro (1963)—in economies where capital goods are mostly imported, a stronger real exchange rate reduces investment costs for domestic firms.
| Author | : Yakov Amihud |
| Publisher | : Beard Books |
| Total Pages | : 268 |
| Release | : 2003 |
| Genre | : Business & Economics |
| ISBN | : 9781587981593 |
Download Exchange Rates and Corporate Performance Book in PDF, ePub and Kindle
This is a reprint of a previously published book. It consists of a series of papers by experts in the field on how the exchange rate volatility of the 1980s affected the financial policies of international firms.
| Author | : Bahar Erdal |
| Publisher | : Routledge |
| Total Pages | : 172 |
| Release | : 2017-05-18 |
| Genre | : Business & Economics |
| ISBN | : 1351801724 |
Download The Effects of Real Exchange Rate Volatility on Sectoral Investment Book in PDF, ePub and Kindle
Originally published in 1997. This study investigates what the effects of real exchange rate volatility are on sectorial investment in the fixed and flexible exchange rate systems. It lays out the results of research into the effects of the levels and volatility of real exchange rates on investment in the manufacturing sectors of the countries in the European Monetary System as well as of the countries in the flexible exchange rate system, with data from between 1973 and 1993. Examining the differences between the two systems in the results this book also looks at exchange rate effects on interest rates at the time.
| Author | : Luis Servén |
| Publisher | : World Bank Publications |
| Total Pages | : 24 |
| Release | : 2002 |
| Genre | : Capital stock |
| ISBN | : |
Download Real Exchange Rate Uncertainty and Private Investment in Developing Countries Book in PDF, ePub and Kindle
Serven examines empirically the link between real exchange rate uncertainty and private investment in developing countries using a large cross country-time series data set. He builds a GARCH-based measure of real exchange rate volatility and finds that it has a strong negative impact on investment, after controlling for other standard investment determinants and taking into account their potential endogeneity. The impact of uncertainty is not uniform, however. There is some evidence of threshold effects, so that uncertainty only matters when it exceeds some critical level. In addition, the negative impact of real exchange rate uncertainty on investment is significantly larger in economies that are highly open and in those with less developed financial systems.
| Author | : Mr.Tidiane Kinda |
| Publisher | : International Monetary Fund |
| Total Pages | : 35 |
| Release | : 2011-01-01 |
| Genre | : Business & Economics |
| ISBN | : 1455211877 |
Download Capital Flows, Exchange Rate Flexibility, and the Real Exchange Rate Book in PDF, ePub and Kindle
This paper analyzes the impact of capital inflows and exchange rate flexibility on the real exchange rate in developing countries based on panel cointegration techniques. The results show that public and private flows are associated with a real exchange rate appreciation. Among private flows, portfolio investment has the highest appreciation effect-almost seven times that of foreign direct investment or bank loans-and private transfers have the lowest effect. Using a de facto measure of exchange rate flexibility, we find that a more flexible exchange rate helps to dampen appreciation of the real exchange rate stemming from capital inflows.
| Author | : Mr.Santanu Chatterjee |
| Publisher | : International Monetary Fund |
| Total Pages | : 40 |
| Release | : 2012-02-01 |
| Genre | : Business & Economics |
| ISBN | : 1463945647 |
Download Fiscal Policy and the Real Exchange Rate Book in PDF, ePub and Kindle
Government spending on infrastructure has recently increased sharply in many emerging-market economies. This paper examines the mechanism through which public infrastructure spending affects the dynamics of the real exchange rate. Using a two-sector dependent open economy model with intersectoral adjustment costs, we show that government spending generates a non-monotonic U-shaped adjustment path for the real exchange rate with sharp intertemporal trade-offs. The effect of government spending on the real exchange rate depends critically on (i) the composition of public spending, (ii) the underlying financing policy, (iii) the intensity of private capital in production, and (iv) the relative productivity of public infrastructure. In deriving these results, the model also identifies conditions under which the predictions of the neoclassical open economy model can be reconciled with empirical regularities, namely the intertemporal relationship between government spending, private consumption, and the real exchange rate.
| Author | : Ms.Nan Geng |
| Publisher | : International Monetary Fund |
| Total Pages | : 20 |
| Release | : 2012-03-01 |
| Genre | : Business & Economics |
| ISBN | : 147550232X |
Download Determinants of Corporate Investment in China Book in PDF, ePub and Kindle
This paper analyzes the evolution of investment in China, its main features, and its key determinants. In recent years, manufacturing, real estate, and infrastructure have been the main drivers of investment. Investment remains largely concentrated in coastal areas, but there has been a shift to greater investments inland in recent years. The empirical analysis of the determinants of investment indicates that financial variables, such as interest rates, the exchange rate, and the depth of the domestic capital market are important determinants of corporate investment. The results suggest in particular that financial sector reform, including that which deregulates and raises real interest rates as well as appreciates the real effective exchange rate, would lower investment and help rebalance growth away from exports and investment toward private consumption.
| Author | : Luis Serven |
| Publisher | : World Bank Publications |
| Total Pages | : 54 |
| Release | : 1990 |
| Genre | : Foreign exchange rates |
| ISBN | : |
Download Anticipated Real Exchange-rate Changes and the Dynamics of Investment Book in PDF, ePub and Kindle
Unanticipated changes in the real exchange rate affect investment through their impact on the desired capital stock, whose direction depends on a number of factors and is in general ambiguous. In contrast, anticipated changes can also have an important effect on the optimal timing of investment, in a direction that depends on the financial openness of the economy and on the important content of capital goods. This issue is explored using a simple macroeconomic model.
| Author | : Bo Jiang |
| Publisher | : International Monetary Fund |
| Total Pages | : 47 |
| Release | : 2019-05-06 |
| Genre | : Business & Economics |
| ISBN | : 1498314023 |
Download The Turning Tide: How Vulnerable are Asian Corporates? Book in PDF, ePub and Kindle
Using a new firm-level dataset with comprehensive information on Asian firms’ FX liabilities, we show that Asia’s nonfinancial corporate sector is vulnerable to a tightening of global financial conditions. Higher global interest rates and exchange rate depreciation increase the probability of default of Asian firms. A 30 percent currency depreciation is associated with a two-notch downgrade in the corporate credit rating (e.g., from A to BBB+), resulting in 7 percent of Asian firms falling into bankruptcy. But the impact is nonlinear—as the firms’ FX liability increases, the balance sheet channel of exchange rate offsets, then dominates, the competitiveness channel. The balance sheet channel offsets the competitiveness channel when the share of U.S. dollar debt is between 10 and 20 percent. We also find that currency depreciation increases firm-level investment on average, but for firms with the share of FX liabilities above 20 percent, investment contracts with depreciation.
