Topic
Exchange rate
About: Exchange rate is a research topic. Over the lifetime, 47255 publications have been published within this topic receiving 944563 citations. The topic is also known as: foreign-exchange rate & forex rate.
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TL;DR: In this paper, the role played by distribution costs in shaping the behavior of the real exchange rate during exchange-rate-based stabilizations was studied and it was shown that distribution costs are very large for the average consumer good.
458 citations
TL;DR: In this paper, the authors explored the factors that contribute to the explanation of FDI in the United States by country of origin of investment, and found that the main significant positive influences are home country's exports to the USA and home country market size.
Abstract: Given the large size and rapid growth of foreign direct investment in the United States, this subject is a central concern of U.S. firms and U.S. government policymakers. This study explores the factors that contribute to the explanation of FDI in the United States by country of origin of investment. Evidence from the past twelve years shows that the main significant positive influences are home country's exports to the United States and home country market size. Significant negative influences include the home country's imports from the United States, the cultural and geographic distances of the home country from the United States, and the exchange rate (fx/$).
455 citations
TL;DR: In this paper, the authors developed and estimated a two-sector dynamic stochastic general equilibrium model to analyze the effects of remittances in emerging market economies and found that an increase in remittance flows leads to a decline in labor supply and a consumption demand that is biased toward nontradables.
Abstract: Using data for El Salvador and Bayesian techniques, we develop and estimate a two-sector dynamic stochastic general equilibrium model to analyze the effects of remittances in emerging market economies. We focus our study on whether rising levels of remittances result in the Dutch disease phenomenon in recipient economies. We find that, whether altruistically motivated or otherwise, an increase in remittances flows leads to a decline in labor supply and an increase in consumption demand that is biased toward nontradables. The increase in demand for nontradables, coupled with higher production costs, results in an increase in the relative price of nontradables, which further causes the real exchange rate to appreciate. The higher nontradable prices serve as an incentive for an expansion of that sector, culminating in reallocation of labor away from the tradable sector. This resource reallocation effect eventually causes a contraction of the tradable sector. A vector autoregression analysis provides results that are consistent with the dynamics of the model.
455 citations
TL;DR: In this paper, the long-run relationship between nominal exchange rates and monetary fundamentals in a quarterly panel of 19 countries extending from 1973.1 to 1997.1 was studied and it was shown that exchange rates are cointegrated with long run determinants predicted by economic theory.
454 citations
TL;DR: In this paper, the effects of real exchange-rate fluctuations on foreign direct investment into the United States during the 1980s were investigated using a sample of foreign investments in sixty-one four-digit SIC U.S. wholesale industries.
Abstract: This paper tests the effects that real exchange-rate fluctuations had on foreign direct investment into the United States during the 1980s. Using a sample of foreign investments in sixty-one four-digit SIC U.S. wholesale industries, this paper finds exchange-rate volatility to be negatively correlated with the number of foreign investments that occur in these industries. This negative effect is most pronounced for industries where sunk investments in physical and intangible assets are relatively high. Although exchange rate volatility deters investment from all countries, its effect was most significant for investments by Japanese companies. Copyright 1993 by MIT Press.
454 citations