Currency volatility and global technological innovation

Po-Hsuan Hsu, Mark Taylor, Zigan Wang and Qi Xu

Journal of International Economics, 2022, vol. 137, issue C

Abstract: We investigate the real effects of foreign exchange (FX) volatility on technological innovation. Using a 32-market, three-decade sample, we show that heightened FX volatility associates with significantly lower firm-level R&D expenditures, patents granted, and forward citations. The negative FX volatility-innovation relation can be attributed to precautionary savings needs and trade slowdown. The relationship is stronger for firms with financial constraints, with the use of foreign debt, and in more open economies; it is weaker for firms with derivatives hedging, with higher sales, and in countries with better financial development.

Keywords: Foreign exchange volatility; Technological innovation; Patents; R&D (search for similar items in EconPapers)
JEL-codes: F31 G32 O30 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Working Paper: Currency Volatility and Global Technological Innovation (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:137:y:2022:i:c:s0022199622000393

DOI: 10.1016/j.jinteco.2022.103607

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