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on International Finance |
| By: | Caglayan, Mustafa (University of Sheffield); Muñoz Torres, Rebeca I. (Department of Economics, University of Warwick) |
| Abstract: | This paper, considering revenue and cost exposure channels, investigates the effects of exchange rate behaviour on fixed capital investment in Mexican manufacturing sector over 1994-2002. We find that i) currency depreciation has a positive (negative) effect on fixed investment through the export (import) channel; ii) exchange rate volatility impacts mostly export oriented sectors ; iii) the sensitivity of investment to exchange rate movements is stronger in non-durable goods sectors and industries with low mark-up ratios. |
| Keywords: | Exchange rate volatility ; investment ; external exposure ; market structure |
| JEL: | E22 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:846&r=ifn |
| By: | Herrmann, Sabine; Winkler, Adalbert |
| Abstract: | Financial globalisation has been associated with divergent current account patterns in emerging market economies. While countries in emerging Asia have been running sizeable current account surpluses, countries in emerging Europe have been facing large current account deficits. In this paper we test for the relevance of financial market characteristics in explaining divergent current account patterns in emerging Europe and emerging Asia based on the assumption that both regions constitute two different convergence clubs with the euro area and the US representing the core, respectively. In line with the theoretical literature, we find that better developed and more integrated financial markets increase emerging markets´ ability to borrow abroad. The degree of financial integration within the convergence clubs as well as the extent of reserve accumulation are found to be the most significant factors to explain divergent current account patterns in emerging Europe and emerging Asia. We conclude that the overall character of integration matters for the pattern of current account developments in catching-up economies. |
| Keywords: | real convergence, economic integration, saving and investment, current account developments, financial markets, emerging market economies |
| JEL: | F15 F21 O16 O52 O53 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:7116&r=ifn |
| By: | Mark David Witte (Department of Economics and Finance, College of Charleston); |
| Abstract: | If a country’s imports are invoiced in a foreign currency then the import prices paid by consumers, and the importing country’s inflation rate, are vulnerable to exchange rate movements. Using a unique multiple market model I exam a representative firm’s currency denomination decision when selling to different countries. The simulation studies the impact of EU expansion on the currency denomination of trade. Results suggest that when preferences are similar across countries EU expansion decreases the likelihood of price discrimination and could decrease the use of the euro as an invoicing currency in the original EU’s imports. |
| Keywords: | currency invoicing, exchange rate, inflation, EU expansion, price discrimination |
| JEL: | F14 F31 |
| URL: | http://d.repec.org/n?u=RePEc:coc:wpaper:3&r=ifn |