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

Mustafa Caglayan () and Rebeca I. Muñoz Torres

No 269844, Economic Research Papers 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: International Relations/Trade; Marketing (search for similar items in EconPapers)
Pages: 20
Date: 2008-03-03
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The Effect of the Exchange Rates on Investment in Mexican Manufacturing Industry (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:269844

DOI: 10.22004/ag.econ.269844

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