Corporate Investment And The Real Exchange Rate

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Corporate Investment and the Real Exchange Rate

Mai Chi Dao,Ms.Camelia Minoiu,Mr.Jonathan David Ostry
Corporate Investment and the Real Exchange Rate Book PDF

Author : Mai Chi Dao,Ms.Camelia Minoiu,Mr.Jonathan David Ostry
Publisher : International Monetary Fund
Page : 47 pages
File Size : 48,8 Mb
Release : 2017-08-04
Category : Business & Economics
ISBN : 9781484313749

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Corporate Investment and the Real Exchange Rate by Mai Chi Dao,Ms.Camelia Minoiu,Mr.Jonathan David Ostry Pdf

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.

Real Exchange Rates, Economic Complexity, and Investment

Steve Brito,Mr.Nicolas E Magud,Mr.Sebastian Sosa
Real Exchange Rates Economic Complexity and Investment Book PDF

Author : Steve Brito,Mr.Nicolas E Magud,Mr.Sebastian Sosa
Publisher : International Monetary Fund
Page : 21 pages
File Size : 48,8 Mb
Release : 2018-05-10
Category : Business & Economics
ISBN : 9781484356340

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Real Exchange Rates, Economic Complexity, and Investment by Steve Brito,Mr.Nicolas E Magud,Mr.Sebastian Sosa Pdf

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.

Exchange Rates and Corporate Performance

Yakov Amihud,Richard M. Levich
Exchange Rates and Corporate Performance Book PDF

Author : Yakov Amihud,Richard M. Levich
Publisher : Beard Books
Page : 268 pages
File Size : 54,7 Mb
Release : 2003
Category : Business & Economics
ISBN : 1587981599

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Exchange Rates and Corporate Performance by Yakov Amihud,Richard M. Levich Pdf

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.

The Effects of Real Exchange Rate Volatility on Sectoral Investment

Bahar Erdal
The Effects of Real Exchange Rate Volatility on Sectoral Investment Book PDF

Author : Bahar Erdal
Publisher : Routledge
Page : 172 pages
File Size : 41,5 Mb
Release : 2017-05-18
Category : Business & Economics
ISBN : 9781351801720

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The Effects of Real Exchange Rate Volatility on Sectoral Investment by Bahar Erdal Pdf

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.

Capital Flows, Exchange Rate Flexibility, and the Real Exchange Rate

Mr.Tidiane Kinda,Jean-Louis Combes,Patrick Plane
Capital Flows Exchange Rate Flexibility and the Real Exchange Rate Book PDF

Author : Mr.Tidiane Kinda,Jean-Louis Combes,Patrick Plane
Publisher : International Monetary Fund
Page : 35 pages
File Size : 41,5 Mb
Release : 2011-01-01
Category : Business & Economics
ISBN : 9781455211876

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Capital Flows, Exchange Rate Flexibility, and the Real Exchange Rate by Mr.Tidiane Kinda,Jean-Louis Combes,Patrick Plane Pdf

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.

Real Exchange Rate Uncertainty and Private Investment in Developing Countries

Luis Servén
Real Exchange Rate Uncertainty and Private Investment in Developing Countries Book PDF

Author : Luis Servén
Publisher : World Bank Publications
Page : 24 pages
File Size : 48,8 Mb
Release : 2002
Category : Capital stock
ISBN : 8210379456XXX

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Real Exchange Rate Uncertainty and Private Investment in Developing Countries by Luis Servén Pdf

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.

Fiscal Policy and the Real Exchange Rate

Mr.Santanu Chatterjee,Mr.Azer Mursagulov
Fiscal Policy and the Real Exchange Rate Book PDF

Author : Mr.Santanu Chatterjee,Mr.Azer Mursagulov
Publisher : International Monetary Fund
Page : 40 pages
File Size : 50,9 Mb
Release : 2012-02-01
Category : Business & Economics
ISBN : 9781463945640

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Fiscal Policy and the Real Exchange Rate by Mr.Santanu Chatterjee,Mr.Azer Mursagulov Pdf

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.

Adjustment, Investment, and the Real Exchange Rate in Developing Countries

Anonim
Adjustment Investment and the Real Exchange Rate in Developing Countries Book PDF

Author : Anonim
Publisher : World Bank Publications
Page : 49 pages
File Size : 49,7 Mb
Release : 2024-06-30
Category : Electronic
ISBN : 8210379456XXX

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Adjustment, Investment, and the Real Exchange Rate in Developing Countries by Anonim Pdf

LDC adjustment packages Riccardo Faini and Jaime de Melo Developing countries have been hit by a fall in their terms of trade, high real interest rates on their external debt, and a drought in commercial lending from abroad. Their subsequent adjustment packages, often supported by loans from the IMF and World Bank, focused on a sharp real exchange rate depreciation to restore external balance and a host of microeconomic reforms to secure a simultaneous supply-side improvement. This paper examines the success of these ‘adjustment with growth' packages in a large sample of developing countries. We find these packages have been much more successful in LDCs which export manufactures than they have in those concentrating on primary exports (primarily low-income African countries); the latter have not resumed sustainable growth, and most of their external adjustment has arisen from expenditure reduction, not an increase in supply. The longer-term prospects for manufacturing exporters are also brighter: there we detect signs of increased efficiency and a smaller decline in investment than in primary exporters. But we also find that a high external debt burden and an unstable macroeconomic environment impede investment in all LDCs. In the longer term, adjustment with growth packages will succeed only if they are accompanied by a more stable macroeconomic environment and appropriate debt relief

Anticipated Real Exchange-rate Changes and the Dynamics of Investment

Luis Serven
Anticipated Real Exchange rate Changes and the Dynamics of Investment Book PDF

Author : Luis Serven
Publisher : World Bank Publications
Page : 54 pages
File Size : 55,5 Mb
Release : 1990
Category : Foreign exchange rates
ISBN : 8210379456XXX

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Anticipated Real Exchange-rate Changes and the Dynamics of Investment by Luis Serven Pdf

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.

Determinants of Corporate Investment in China

Ms.Nan Geng,Mr.Papa N'Diaye
Determinants of Corporate Investment in China Book PDF

Author : Ms.Nan Geng,Mr.Papa N'Diaye
Publisher : International Monetary Fund
Page : 20 pages
File Size : 43,9 Mb
Release : 2012-03-01
Category : Business & Economics
ISBN : 9781475581812

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Determinants of Corporate Investment in China by Ms.Nan Geng,Mr.Papa N'Diaye Pdf

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.

Real Exchange Rate Uncertainty and Private Investment in Developing Countries

Luis Servén
Real Exchange Rate Uncertainty and Private Investment in Developing Countries Book PDF

Author : Luis Servén
Publisher : Unknown
Page : 21 pages
File Size : 55,5 Mb
Release : 2016
Category : Electronic
ISBN : OCLC:1290704497

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Real Exchange Rate Uncertainty and Private Investment in Developing Countries by Luis Servén Pdf

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.This paper - a product of the Office of the Chief Economist, Latin America and the Caribbean Region - is part of a larger effort in the region to assess the effects of macroeconomic volatility.

The Turning Tide: How Vulnerable are Asian Corporates?

Bo Jiang,Tahsin Saadi Sedik
The Turning Tide How Vulnerable are Asian Corporates Book PDF

Author : Bo Jiang,Tahsin Saadi Sedik
Publisher : International Monetary Fund
Page : 47 pages
File Size : 47,8 Mb
Release : 2019-05-06
Category : Business & Economics
ISBN : 9781498314022

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The Turning Tide: How Vulnerable are Asian Corporates? by Bo Jiang,Tahsin Saadi Sedik Pdf

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.

Valuation

Sheridan Titman,John D. Martin
Valuation Book PDF

Author : Sheridan Titman,John D. Martin
Publisher : Addison Wesley Publishing Company
Page : 602 pages
File Size : 53,7 Mb
Release : 2008
Category : Business & Economics
ISBN : IND:30000115887923

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Valuation by Sheridan Titman,John D. Martin Pdf

Valuation: The Art and Science of Corporate Investment Decisions is the first textbook to offer an integrated approach to both project and enterprise valuation. The text goes beyond standard DCF analysis by including additional valuation methods commonly used in practice, such as comparables, simulations (including Crystal Ball®), and real options. In addition, discussions are considered against the backdrop of other quantitative and qualitative corporate issues that affect valuation, including: Organizational structure and incentives: The text examines how the corporate decision-making process as well as the incentive system can positively or negatively affect valuation. Strategic analysis and real options: Real options are presented as a tool to complement executive intuition and provide a more disciplined evaluation process that focuses on creating value. Risk management and hedging: Risks associated with interest rate fluctuations, variable foreign exchange rates, and fluctuating commodity prices can create hedging and risk management opportunities that affect value. Financing: The ability to secure attractive financing terms is an important source of value, and readers should understand how financing opportunities influence the value of an investment opportunity. Irrational behavior: The text examines how limitations in cognitive abilities and biases in assessing abilities of key players can affect valuation.

Real Exchange Rates, Economic Complexity, and Investment

Steve Brito,Mr.Nicolas E Magud,Mr.Sebastian Sosa
Real Exchange Rates Economic Complexity and Investment Book PDF

Author : Steve Brito,Mr.Nicolas E Magud,Mr.Sebastian Sosa
Publisher : International Monetary Fund
Page : 21 pages
File Size : 54,6 Mb
Release : 2018-05-10
Category : Business & Economics
ISBN : 9781484354834

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Real Exchange Rates, Economic Complexity, and Investment by Steve Brito,Mr.Nicolas E Magud,Mr.Sebastian Sosa Pdf

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.

Investment in Emerging Markets We Are Not in Kansas Anymore...Or Are We?

Mr.Nicolas E. Magud,Mr.Sebastian Sosa
Investment in Emerging Markets We Are Not in Kansas Anymore Or Are We Book PDF

Author : Mr.Nicolas E. Magud,Mr.Sebastian Sosa
Publisher : International Monetary Fund
Page : 31 pages
File Size : 50,9 Mb
Release : 2015-04-03
Category : Business & Economics
ISBN : 9781475534221

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Investment in Emerging Markets We Are Not in Kansas Anymore...Or Are We? by Mr.Nicolas E. Magud,Mr.Sebastian Sosa Pdf

We document that (i) although private investment growth in emerging markets has decelerated in recent years, it came down from cyclical highs and remains close to pre-crisis trends; and (ii) investment-to-output ratios generally remain close to or above historical averages. We show that investment is positively related to expect future profitability, cash flows and debt flows, and negatively associated with leverage. Critically, it is also positively related to (country-specific) commodity export prices and capital inflows. Lower commodity export prices and expected profitability, a moderation in capital inflows, and increased leverage account for the bulk of the recent investment deceleration.