EconPapers    
Economics at your fingertips  
 

Balance Sheet Effects in Currency Crises: Evidence from Brazil

Marcio Janot, Marcio Garcia and Walter Novaes

No 162, Working Papers Series from Central Bank of Brazil, Research Department

Abstract: "Third-generation currency crises models" argue that capital losses from exchange-rate depreciation propagate the crises to the productive sector. To test these models, we use a firm-level dataset that allows us to measure currency mismatches around the 2002 Brazilian currency crisis. We find that, between 2001 and 2003, firms that shortly before the crisis had large currency mismatches decreased their investment rates by 8.1 percentual points, relatively to other public firms. Moreover, we show that the currency depreciation implied large competitive gains for the exporters, and yet the investment of exporters with large currency mismatches fell by 12.5 percentual points, relatively to other exporters. The estimated falls in investment are economically very relevant, thereby corroborating the relevance of third generation models negative balance sheet effects.

Date: 2008-04
New Economics Papers: this item is included in nep-cba, nep-dev, nep-ifn and nep-mon
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://www.bcb.gov.br/content/publicacoes/WorkingPaperSeries/wps162.pdf (application/pdf)

Related works:
Working Paper: Balance Sheet Effects in Currency Crises: Evidence from Brazil (2008) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bcb:wpaper:162

Access Statistics for this paper

More papers in Working Papers Series from Central Bank of Brazil, Research Department
Bibliographic data for series maintained by Rodrigo Barbone Gonzalez (rodrigo.gonzalez@bcb.gov.br).

 
Page updated 2024-11-14
Handle: RePEc:bcb:wpaper:162