Download or read book The Effects of Real Exchange Rate Volatility on Sectoral Investment written by Bahar Erdal and published by Routledge. This book was released on 2017-05-18 with total page 172 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Download or read book Real Exchange Rates Economic Complexity and Investment written by Steve Brito and published by International Monetary Fund. This book was released on 2018-05-10 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Download or read book Exchange Rate Volatility and Trade Flows Some New Evidence written by International Monetary Fund and published by International Monetary Fund. This book was released on 2004-05-19 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt: NULL
Download or read book Nominal Exchange Rate Patterns written by Linda S. Goldberg and published by . This book was released on 1990 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: The view that the strength of the dollar in the early 1980s was associated with persistent restructuring of United States industry is supported by correlations between exchange rate patterns and data on business formation, business failure and sectoral investment in new plant and equipment. Short term trend depreciations of the dollar are associated with reallocation of resources across sectors, while longer term trend depreciations are associated with investment expansions in many sectors of industry. Persistent exchange rate volatility is strongly associated with investment contractions, with this effect weakest during depreciation periods. This suggests a second order effect of depreciation trends: during trend depreciation periods the negative and significant correlation between exchange rate volatility and investment is reduced.
Download or read book Trade and Investment Performance Under Floating Exchange Rates written by International Monetary Fund and published by International Monetary Fund. This book was released on 1988-05-03 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: Contrary to the arguments of several scholars, we have failed to find either a conclusive theoretical case or clear empirical evidence of an effect, harmful or otherwise, of exchange rate variability (as measured by either short-term volatility or long-run misalignment) on overall levels of international trade. In this paper, after reviewing the theories and evidence on this issue, we go on to consider the impact of exchange rate variability on direct foreign investment. We summarize and amplify upon the scant theoretical literature of this issue, and proceed to test U.S. data for the presence of such an impact. We find none.
Download or read book The Effects of Real Exchange Rate Volatility on Sectoral Investment written by Bahar Erdal and published by Routledge. This book was released on 2017-05-18 with total page 150 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Download or read book Real Exchange Rates and Foreign Portfolio Investment written by Patrick Roll Bloom and published by . This book was released on 2019 with total page 120 pages. Available in PDF, EPUB and Kindle. Book excerpt: Chapter 1 uses real interest rates to show that the long-term real exchange rate and a risk premium are more volatile than the nominal exchange rate for four developing countries. Chapter 2 finds country-level effects of foreign portfolio investment in 18 developing countries and proposes a channel for real exchange rate volatility driven by foreign portfolio investment. Chapter 3 shows that there are plant-level productivity gains in Chile from small levels and small increases in foreign ownership typical of portfolio investment. Nominal exchange rate changes can be decomposed into inflation differentials and real components, each having different causes and consequences. Although we have explanations for each component, the relative importance of the long-run real exchange rate has previously not been quantified. Chapter 1 uses inflation-linked bond data for Brazil, Mexico, South Africa, and Turkey to quantify the contribution of those components to exchange rate changes against the United States. We find that the long-term expected real exchange rate plus its risk premium is even more volatile than the nominal exchange rate. Volatility and unforecastability of real exchange rates is a fundamental puzzle of international economics, and these features are even more pronounced in developing countries. In chapter 2, we present a new fact, that inward portfolio investment in equities predicts the extensive margin of imports in 18 developing countries. With this we build a purely real model in which foreign investors finance new intermediate inputs and increase productivity in the tradeable goods sector. We express the Balassa-Samuelson determined real exchange rate as a function of foreign investment. We use the established fact that investors in developed countries exhibit positive feedback or operate under portfolio constraints and show how therefore the real exchange rate reacts positively to equity prices. We test and confirm the prediction of the model that equity portfolio investment predicts exchange rates at quarterly frequencies. We also confirm that the extensive margin of imports comoves with the real exchange rate at annual frequencies, and do not reject that equity portfolio investment acts through this channel only. In chapter 3, we measure the effect of foreign ownership on the productivity of Chilean manufacturers between 1998 and 2001. Total factor productivity is measured at the plant level using multiple alternative methods. Both the level of foreign ownership and increases in foreign ownership are significant predictors of productivity. These effects remain when restricting the sample to plants with low foreign ownership and small changes in foreign ownership, showing the importance of foreign portfolio investment on productivity. A non-parametric fit suggests that low levels of foreign ownership are as significant as larger stakes. When controlling for endogeneity in the foreign investment decision by instrumenting with total developed countries' portfolio outflows the positive effects on productivity remain. Finally we show that foreign ownership predicts that firms source more of their intermediate inputs from abroad.
Download or read book When and Why Worry About Real Exchange Rate Appreciation The Missing Link Between Dutch Disease and Growth written by International Monetary Fund and published by International Monetary Fund. This book was released on 2010-12-01 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: We review the literature on Dutch disease, and document that shocks that trigger foreign exchange inflows (such as natural resource booms, surges in foreign aid, remittances, or capital inflows) appreciate the real exchange rate, generate factor reallocation, and reduce manufacturing output and net exports. We also observe that real exchange rate misalignment due to overvaluation and higher volatility of the real exchange rate lower growth. Regarding the effect of undervaluation of the exchange rate on economic growth, the evidence is mixed and inconclusive. However, there is no evidence in the literature that Dutch disease reduces overall economic growth. Policy responses should aim at adequately managing the boom and the risks associated with it.
Download or read book The Effects of Capital Controls on Exchange Rate Volatility and Output written by Michael Frenkel and published by . This book was released on 2001 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Portfolio Inflows and Real Effective Exchange Rates written by Rasmané Ouedraogo and published by International Monetary Fund. This book was released on 2017-05-22 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: It has been well-established in the literature that portfolio inflows appreciate the real effective exchange rate. However, the literature lacks a systematic empirical analysis of the impact of portfolio inflows by institutional sector or borrower type. This paper fills this gap by exploring the impact of the inflows of portfolio capital into three institutional sectors (government, banks and corporates) on the real effective exchange rate. Using a large sample of 73 countries, it shows that the effect of portfolio inflows on the real effective exchange rate depends on the sector the investment flows in. The findings are robust to different econometric methods, additional variables in the model, and various indicators of real effective exchange rates.
Download or read book Financial Volatility and Real Economic Activity written by Kevin Daly and published by Routledge. This book was released on 2019-01-15 with total page 140 pages. Available in PDF, EPUB and Kindle. Book excerpt: Published in 1999. The issue of financial volatility, especially since financial deregulation, has given rise to concerns regarding the effects of increased financial volatility on real economic activity. Two issues represent a substantial challenge to financial economists with respect to these concerns. The first relates to the identification of the causes of increased volatility in financial markets. Identification is a first step towards increasing both financial economists' and policy-makers' understanding of the interrelated causes of financial volatility. The second requires linking the effects of increased financial volatility to the real sector of the economy by examining the channels through which financial volatility influences fundamental economic variables. In order to address these two issues, the analysis initially develops and estimates a model which is capable of explaining the financial and business cycle determinates of movements in the conditional volatility of the Australian All Industrials stock market index. Evidence suggests that a significant linkage exists between the conditional volatility of the money supply. Models are then developed to examine how monetary volatility is transmitted to the volatility of financial asset prices, inflation and real output in an open economy. The results indicate that while financial volatility has increased to some extent since the late 1980s, this has been transferred non-uniformly towards increasing volatility of both real and financial activity.
Download or read book Adjustments of the Financial and Corporate Sector to the Changes in Exchange Rate Volatility and Their Policy Implications in the SEACEN Countries written by Dagva Boldbaatar and published by . This book was released on 2007 with total page 300 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Impact of Exchange Rate Volatility on U S Foreign Direct Investment in Latin America written by Callye R. M. Masten and published by ProQuest. This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The determinants of foreign direct investment (FDI) have been widely examined. Previous studies have shown that exchange rates play a vital role in the analysis and are a major determinant in the flow of FDI. Most research has focused on examining how exchange rate volatility affects the economies of developed nations. However, little research has been done in understanding the impact of exchange rate volatility on FDI flows to Latin America. Developing countries lack the capital that is needed for further growth. Therefore, FDI is important to developing countries, because it allows them to gain the necessary capital. This paper examines the relationship between exchange rate volatility, political institutions and FDI flows into Latin America across two sectors: food processing, and industrial manufacturing. Empirical results show that exchange rate volatility significantly deters the flow of U.S. FDI into Latin America. Other significant economic factors are U.S. interest rates and openness to trade. Conflict and corruption are the political risk factors that have significant impacts on FDI flows. Conclusions from the paper recommend governments in Latin America to implement macroeconomic polices that promote stability, which could help reduce exchange rate volatility and lower inflation.
Download or read book Investment in Manufacturing Exchange rates and External Exposure written by Jose Campa and published by . This book was released on 1993 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies the linkage between exchange rates and investment. emphasizing the role of producer exposure through export sales and through imported inputs into production. For two-digit United States manufacturing sectors we present time series of export shares and imported input shares. On average. manufacturing sectors have evolved from being primarily export exposed in the 1970s to being primarily import exposed by the early 1980s. Due to this pattern in exposure. exchange rate appreciations reduced investment in durable goods sectors in the 1970s and stimulated investment after 1983. By contrast nondurables sectors tended to absorb exchange rate changes in price over cost markups. Exchange rate volatility depressed investment but the effects were quantitatively small.
Download or read book Market Volatility and Foreign Exchange Intervention in EMEs written by Banco de Pagos Internacionales (Basilea, Suiza). Departamento Monetario y Económico and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Volatility and Growth written by Philippe Aghion and published by Oxford University Press, USA. This book was released on 2005-07-28 with total page 159 pages. Available in PDF, EPUB and Kindle. Book excerpt: An original work containing new theory and empirical analyses on the macropolicy of growth. Provides a new approach capable of generating relevant policy prescriptions. Written in an accessible style using simple models.
Download or read book On the Causes and Effects of Real Exchange Rate Variability written by Rogelio Arellano-Cadena and published by . This book was released on 1990 with total page 240 pages. Available in PDF, EPUB and Kindle. Book excerpt:
