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on Business Economics |
| By: | Nuwat Nookhwun; Jettawat Pattararangrong; Phurichai Rungcharoenkitkul |
| Abstract: | Under dominant currency pricing, exchange rate swings affect firms' profits in domestic currency rather than price competitiveness. We quantify these valuation effects by constructing firm-specific exchange rates that reflect invoicing currencies and capture cash-flow exposures. These net-invoice-currency-weighted exchange rates (NICER) outperform trade-weighted exchange rates in explaining firm profitability, particularly for smaller exporters. Higher trade dependency amplifies NICER sensitivities, while financial hedging only partially mitigates them. NICER fluctuations also impact firm liquidity and credit conditions, with large exporters offsetting liquidity shocks through external financing. These cash-flow effects, in turn, drive exporters' investment and employment decisions. |
| Keywords: | exchange rates, valuation effects, dominant currency paradigm, firm-level data, firm profitability, invoicing currency, exports, financial hedging |
| JEL: | E44 F31 F41 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1266 |
| By: | Manuel Menkhoff |
| Abstract: | This paper examines novel survey evidence on firms’ beliefs about macroeconomic tail risk and their role in investment decisions. In a large survey of German firms, I elicit (i) the subjective probability of a severe macroeconomic downturn and (ii) firms’ exposure to such an event. I consistently find across different empirical approaches that a higher probability of a severe macroeconomic downturn substantially lowers investment, particularly for firms that report higher exposure to the event. I attribute less than half of the investment response to changes in firms' subjective first and second moments. In a quantitative heterogeneous firm model calibrated to match the survey evidence, firms' concern with tail risk makes fiscal policy particularly effective for stabilizing investment. |
| Keywords: | macroeconomic tail risk, rare events, firm expectations, investment. |
| JEL: | D84 E22 E32 G30 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11848 |
| By: | Thaline do Prado; Marcelo Santos; Bernardus Van Doornik |
| Abstract: | We study the impacts of enforcing compliance with labor regulations on firm dynamics by combining firm-level administrative records and labor inspection data on formal Brazilian establishments committing “unregistered employee” infractions. We first provide suggestive evidence that inspected firms employing informal workers are more likely to exit following a labor inspection, compared to firms never penalized for such infractions. Next, we apply a difference-in-differences framework using firms not yet penalized for “unregistered employee” infractions as the control group to estimate the effect of labor inspections on firm-level outcomes. We find that formal employment and formal labor hiring experience a positive spike in the year of the inspection, indicating the formalization of unregistered employees. However, formal employment declines steadily over time, dropping nearly 60% by the fourth year after inspection. Among firms with active bank relationships, revenue falls sharply by about 24% over the same period. We also observe a persistent reduction in the outstanding loan amount and significant rise in the non-performing loan ratio. The average formal wage drops by about 1% in the year of inspection, but returns to pre-inspection levels in later years. Our findings are consistent with firms reducing their overall labor usage due to higher labor costs, which arise from increased compliance with labor regulations following a labor inspection. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:bcb:wpaper:622 |
| By: | Galindo da Fonseca, JoaÞo; Santarrosa, Rogerio |
| Abstract: | We test whether firms react to changes in the wages and size of their competitors. We use a unique institutional feature of public procurement auctions in Brazil: the moment in which the auction ends is random. For close auctions, winner and runner-up are as good as randomly assigned. We first show that firm-specific demand shocks lead to increases in the size and wages of the firm receiving the shock. Then, we document that these firm-specific demand shocks lead to increased wages of other (competing) firms in the same local labor market. We do not find negative effects on competitors' firm size. The effects are driven by competing firms responding to demand shocks from firms with high labor market share. |
| JEL: | J01 J23 J30 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14084 |
| By: | Askenazy, Philippe (CNRS); Di Nallo, Ugo (INSEE); Ramajo, Ismaël (DARES, French Ministry of Labour); Thiounn, Conrad (DARES, French Ministry of Labour) |
| Abstract: | Teleworking has been widely adopted in France since the Covid-19 crisis. This study traces its evolution from 2019 to late 2024, using worker and employer surveys, firm agreements, and administrative sources. After peaking during lockdowns, telework stabilized at 23% of the private workforce, mainly among managers, with no recent signs of decline. Textual analysis of agreements shows a dominant hybrid model of two days per week, confirmed by the Labour Force Survey, with most workers satisfied. Telework correlates with firm characteristics (more common in large firms), job composition (managers influence non-managers), housing (larger homes, longer commutes), and individual or household traits (men telework less, partner's telework increases likelihood), highlighting key telework dynamics. These correlations hold under different specifications, including firm fixed-effects models. |
| Keywords: | gender, firm agreements, telework, family, housing |
| JEL: | L23 J52 J81 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17874 |
| By: | P. ASKENAZY (Insee, Centre Maurice Halbwachs); U. DI NALO (Insee- Marchés et entreprises); I. RAMAJO (Dares); C. THIOUNN (Dares) |
| Abstract: | Teleworking has been widely adopted in France since the Covid 19 crisis. This study traces its evolution from 2019 to late 2024, using worker and employer surveys, firm agreements and administrative databases. After peaking during lockdowns, telework stabilized at 23% of the private workforce, mainly among managers, without recent signs of decline. Textual analysis of agreements shows a dominant hybrid model of typically two telework days per week, confirmed by the Labour Force Survey, with most workers satisfied. Telework correlates with firm characteristics (more common in large firms), job composition (managers influence non-managers), housing (larger homes, longer commutes), and individual and household dimensions (men telework less, partners’ telework increases likelihood), highlighting some key telework dynamics. The latter correlations persist for different specifications including a firm fixed-effects model. |
| Keywords: | Telework, firm agreements, gender, family, housing |
| JEL: | L23 J52 J81 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:nse:doctra:2025-09 |