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The effect of the exchange rates on investment in Mexican manufacturing industry

Caglayan, Mustafa and Muñoz Torres, Rebeca I. (2011) The effect of the exchange rates on investment in Mexican manufacturing industry. Open Economies Review, 22 (4). pp. 669-683. ISSN 0923-7992

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Official URL: http://dx.doi.org/10.1007/s11079-010-9166-0

Abstract

This paper, considering revenue and cost exposure channels, investigates the effects of exchange rate on fixed capital investment in Mexican manufacturing sector over 1994–2003. 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.

Item Type:Article
Research Community:University of Westminster > Westminster Business School
ID Code:7838
Deposited On:23 Apr 2010 10:51
Last Modified:22 Aug 2011 11:27

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