The Effect of the Exchange Rates on Investment in Mexican Manufacturing Industry

Mustafa Caglayan () and Rebeca I. Muñoz Torres
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Rebeca I. Muñoz Torres: Department of Economics, University of Warwick

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: This paper, considering revenue and cost exposure channels, investigates the effects of exchange rate behaviour on fixed capital investment in Mexican manufacturing sector over 1994-2002. 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.

Keywords: Exchange rate volatility; investment; external exposure; market structure (search for similar items in EconPapers)
JEL-codes: E22 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2008
New Economics Papers: this item is included in nep-ifn, nep-mac and nep-opm
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Citations: View citations in EconPapers (1)

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https://warwick.ac.uk/fac/soc/economics/research/w ... s/2008/twerp_846.pdf

Related works:
Journal Article: The Effect of the Exchange Rates on Investment in Mexican Manufacturing Industry (2011)
Working Paper: The Effect of the Exchange Rates on Investment in Mexican Manufacturing Industry (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:846

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