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Exchange Rate Exposure and Firm Dynamics

Juliana Salomao and Liliana Varela ()
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Juliana Salomao: University of Minnesota

No 523, 2018 Meeting Papers from Society for Economic Dynamics

Abstract: This paper develops a firm-dynamics model with endogenous currency debt composition to study financing and investment decisions in developing economies. In our model, foreign currency borrowing arises from a trade-off between exposure to currency risk and growth. There is cross-sectional heterogeneity in these decisions in two dimensions. First, there is selection into foreign currency borrowing, as only productive firms employ it. Second, there is heterogeneity in firms’ share of foreign currency loans, driven by their potential growth. We assess econometrically the pattern of foreign currency borrowing using firm-level census data on Hungary, calibrate the model and quantify its aggregate impact.

New Economics Papers: this item is included in nep-dge and nep-ifn
Date: 2018
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https://economicdynamics.org/meetpapers/2018/paper_523.pdf (application/pdf)

Related works:
Working Paper: Exchange Rate Exposure and Firm Dynamics (2018) Downloads
Working Paper: Exchange Rate Exposure and Firm Dynamics (2018) Downloads
Working Paper: Exchange Rate Exposure and Firm Dynamics (2018) Downloads
Working Paper: Exchange Rate Exposure and Firm Dynamics (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed018:523

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More papers in 2018 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
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