Exchange Rate Exposure and Firm Dynamics

Juliana Salomao and Liliana Varela
Additional contact information
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.

Date: 2018
New Economics Papers: this item is included in nep-dge and nep-ifn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2018/paper_523.pdf (application/pdf)

Related works:
Journal Article: Exchange Rate Exposure and Firm Dynamics (2022)
Working Paper: Exchange rate exposure and firm dynamics (2022)
Working Paper: Exchange rate exposure and firm dynamics (2020)
Working Paper: Exchange Rate Exposure and Firm Dynamics (2018)
Working Paper: Exchange Rate Exposure and Firm Dynamics (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:sed018:523

Access Statistics for this paper

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.
Bibliographic data for series maintained by Christian Zimmermann ().