Exchange Rates and Foreign Direct Investment: an Imperfect Capital Markets Approach
In: NBER Working Paper No. w2914
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In: NBER Working Paper No. w2914
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In: The Research Handbook of Financial Markets, edited by Refet Gürkaynak and Jonathan Wright. Edward Elgar. 2023, May.
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This paper examines the foreign exchange rate exposures of US companies and how they are linked to foreign macroeconomic determinants. I use US trade-weighted macroeconomic indices of foreign countries to explain the variation in foreign exchange rate exposures, measured as the sensitivities of stock returns to exchange rate returns of US non-financial companies over the period 1995 to 2017. I find strong evidence that the after-hedging exposures of potential exporters are affected by their expectations of foreign market gross domestic products, current account balances, consumer price indices, term spreads, unit labor costs as well as government expenditures.
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In: NBER working paper series 7738
World Affairs Online
In: Outstanding dissertations in economics
In: Credit and Capital Markets, Issue 2, Vol. 48, 2015
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In: Economica, Band 34, Heft 135, S. 289
This report examines the de facto foreign exchange rate policies adopted by the monetary authorities of East Asian governments.
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In: CESifo Working Paper Series No. 2613
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In: Discussion paper series 6553
In: International macroeconomics
The target zone model by Krugman (1991) assumes that foreign exchange intervention targets exchange rate levels. We argue that the fit of this model depends on the stage of development of capital markets. Foreign exchange intervention of countries with highly developed capital markets is in line with Krugman's (1991) model as the exchange rate level is targeted (mostly to sustain the competitiveness of exports) and the volatility of day-to-day exchange rate changes are left to market forces. In contrast, countries with underdeveloped capital markets control both volatility of day-to-day exchange rate changes as well as long-term fluctuations of the exchange rate levels to sustain the competitiveness of exports as well as to reduce the risk for short-term and long-term payment flows. Estimations of foreign exchange intervention reaction functions for Japan and Croatia trace the asymmetric pattern of foreign exchange intervention in countries with developed and underdeveloped capital markets.
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In: BIS Paper No. 73o
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In: Tiwari, R., Khem Chand, Anjum, B., Phuyal, M. (2017). Relationship between Stock Market Index and Foreign Exchange Rate after Demonetisation in India, International Research Journal of Management and Commerce, 4(11), 316-326.
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