Investment, Pass-Through and Exchange Rates: A Cross-Country Comparison / Jose Campa, Linda S. Goldberg.

Format:

Book

Author/Creator:

Campa, José.

Contributor:

National Bureau of Economic Research.

Goldberg, Linda S.

Series:

Working Paper Series (National Bureau of Economic Research) no. w5139.

NBER working paper series no. w5139

Language:

English

Subjects (All):

Capital investments.

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Investment, Pass-Through and Exchange Rates

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1995.

Cambridge, Mass. : National Bureau of Economic Research, 1995.

Summary:

Although large changes in real exchange rates have occurred during the past decades, the real implications of these movements remain an empirical question. Using detailed data from the United States, Canada, the United Kingdom, and Japan we examine the implications of exchange rates for time series of sectoral investment. Both theoretically and empirically we show that investment responsiveness to exchange rates varies over time, positively in relation to sectoral reliance on export share and negatively with respect to imported inputs into production. The quantitative importance of each of these channels of exposure is a function of a set of exchange rate pass-through and demand elasticities. There exist important differences in investment endogeneity across high and low markup sectors, with investment in low markup sectors significantly more responsive to exchange rates. Unlike pass-through elasticities, which are viewed as industry-specific, investment endogeneity to exchange rates is a country-specific phenomenon.

Notes:

Print version record

June 1995.