scholarly journals Exchange rate fluctuations and quality composition of exports: Evidence from Swiss product‐level data

World Economy ◽  
2019 ◽  
Vol 43 (6) ◽  
pp. 1592-1618
Author(s):  
Dario Fauceglia
Keyword(s):  
Exchange Rate ◽  
Product Level ◽  
Exchange Rate Fluctuations ◽  
Level Data

scholarly journals Exchange Rate Fluctuations and Firm Leverage

2020 ◽  
Vol 20 (283) ◽  
Author(s):  
Ilhyock Shim ◽  
Sebnem Kalemli-Ozcan ◽  
Xiaoxi Liu
Keyword(s):  
Exchange Rate ◽  
Foreign Currency ◽  
Emerging Market ◽  
Firm Level ◽  
Balance Sheets ◽  
Net Worth ◽  
Exchange Rate Fluctuations ◽  
Level Data ◽  
Firm Leverage ◽  
Foreign Currency Debt

We quantify the effect of exchange rate fluctuations on firm leverage. When home currency appreciates, firms who hold foreign currency debt and local currency assets observe higher net worth as appreciation lowers the value of their foreign currency debt. These firms can borrow more as a result and increase their leverage. When home currency depreciates, the reverse happens as firms have to de-lever with a negative shock to their balance sheets. Using firm-level data for leverage from 10 emerging market economies during the period from 2002 to 2015, we show that firms operating in countries whose non-financial sectors hold more of the debt in foreign currency, increase (decrease) their leverage relatively more after home currency appreciations (depreciations). Combining the leverage data with firm-level FX debt data for 4 emerging market countries, we further show that our results hold at the most granular level. Our quantitative results are asymmetric: the effects of depre-ciations, that are generally associated with sudden stops, are quantitatively larger than those of appreciations, which take place at a slower pace over time during capital inflow episodes. As our exercise compares depreciations and appreciations of similar size, these results are suggestive of financial frictions being more binding during depreciations than a possible relaxation of such frictions during appreciations.

Exchange rate fluctuations and foreign sourcing

1994 ◽  
Vol 8 (4) ◽  
pp. 435-446
Author(s):  
Robert Carbaugh ◽  
Darwin Wassink
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Fluctuations

Monetary and Exchange Rate Policies for International Financial Stability: A Proposal

1988 ◽  
Vol 2 (1) ◽  
pp. 83-103 ◽  
Author(s):  
Ronald I McKinnon
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Foreign Exchange ◽  
Purchasing Power Parity ◽  
Financial Stability ◽  
Foreign Exchange Market ◽  
The United States ◽  
Power Parity ◽  
Monetary Reform ◽  
Exchange Rate Fluctuations

What keeps the three major industrial blocs -- Western Europe, North America, and industrialized Asia -- from developing a common monetary standard to prevent exchange-rate fluctuations? One important reason is the differing theoretical perspectives of economic advisers. The first issue is whether or not a floating foreign exchange market -- where governments do not systematically target exchange rates -- is “efficient.” Many economists believe that exchange risk can be effectively hedged in forward markets so international monetary reform is unnecessary. Second, after a decade and a half of unremitting turbulence in the foreign exchange markets, economists cannot agree on “equilibrium” or desirable official targets for exchange rates if they were to be stabilized. The contending principles of purchasing power parity and of balanced trade yield very different estimates for the “correct” yen/dollar and mark/dollar exchange rates. Third, if the three major blocs can agree to fix nominal exchange rates within narrow bands, by what working rule should the new monetary standard be anchored to prevent worldwide inflation or deflation? After considering the magnitude of exchange-rate fluctuations since floating began in the early 1970s, I analyze these conceptual issues in the course of demonstrating how the central banks of Japan, the United States, and Germany (representing the continental European bloc) can establish fixed exchange rates and international monetary stability.

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