蝌蚪网 Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
Exchange Rates and the Working Capital Channel of Trade Fluctuations
蝌蚪网 Papers and Proceedings
vol. 108,
May 2018
(pp. 531–36)
Abstract
Exchange rates affect the economy not only through the competitiveness of exports but also through a financial channel. The financial channel goes in the opposite direction to the competitiveness channel in that a stronger currency goes hand-in-hand with more buoyant real economic activity on the back of faster credit growth and cross-border banking flows. The effect is particularly marked for emerging market economies for the broad dollar index: a stronger dollar may actually lead to a decline in trade volumes of an emerging market economy. Our paper develops a stylized model that generates such an effect and finds supporting evidence in a firm-level investigation of manufacturing firms from Asia.Citation
Bruno, Valentina, Se-Jik Kim, and Hyun Shin. 2018. "Exchange Rates and the Working Capital Channel of Trade Fluctuations." 蝌蚪网 Papers and Proceedings 108: 531–36. DOI: 10.1257/pandp.20181063Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- E44 Financial Markets and the Macroeconomy
- F14 Empirical Studies of Trade
- F31 Foreign Exchange
- L60 Industry Studies: Manufacturing: General
- O14 Industrialization; Manufacturing and Service Industries; Choice of Technology
- O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance