Automation Under Constraints: Exchange Rates Interest Rates and Investment

Meghana Ayyagari, Vojislav Maksimovic, Rodimiro Rodrigo and Ariel Weinberger

No 12526, CESifo Working Paper Series from CESifo

Abstract: The yen depreciation from 2012–2015 reduced robot prices for U.S. firms. Paradoxically, financially constrained firms dramatically increased adoption relative to their unconstrained peers. We rationalize this with a collateral model: robots are pledgeable assets requiring non-pledgeable intangibles, raising the effective cash invoice for constrained firms and amplifying their elasticities. Linking robot and automation machinery imports to Compustat, we find constrained firms are twice as responsive to exchange rate and interest rate shocks, with capital prices dominating (45-60% larger) borrowing costs. Results reveal a collateral channel reallocating technology adoption toward constrained incumbents, with implications for technology diffusion and competitive dynamics.

Keywords: automation; robots; financial constraints; investment; prices of capital goods; technology adoption; monetary policy; foreign exchange (search for similar items in EconPapers)
JEL-codes: D22 E22 E52 F31 L10 O14 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12526

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