Investment, Pass-Through, and Exchange Rates: A Cross-Country Comparison

Posted: 5 Jan 1998

See all articles by José Manuel Campa

José Manuel Campa

University of Navarra - Madrid Campus - IESE Business School; National Bureau of Economic Research (NBER)

Linda S. Goldberg

Federal Reserve Bank of New York; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: June 1996

Abstract

Using detailed data from the United States, Canada, the United Kingdom, and Japan, we examine the implications of exchange rates for time series of sectoral investment. Both theoretically and empirically we show that investment responsiveness to exchange rates varies over time, positively in relation to sectoral reliance on export share and negatively with respect to the share of imported inputs in production. Important differences exist in investment endogeneity across high and low markup sectors, with investment in low markup sectors often significantly more responsive to exchange rates. Cross-country differences in investment response are only partially explained by industrial organization arguments.

Keywords: investment and exchange rates

JEL Classification: E22, F31, F30

Suggested Citation

Campa, José Manuel and Goldberg, Linda S., Investment, Pass-Through, and Exchange Rates: A Cross-Country Comparison (June 1996). FRB of New York Staff Report No. 14. Available at SSRN: https://ssrn.com/abstract=48278 or http://dx.doi.org/10.2139/ssrn.48278

José Manuel Campa (Contact Author)

University of Navarra - Madrid Campus - IESE Business School ( email )

Camino del Cerro del Aguila 3
Madrid, 28023
Spain
+34 91 357 0809 (Phone)
+34 91 357 2913 (Fax)

National Bureau of Economic Research (NBER)

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United States

Linda S. Goldberg

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-2836 (Phone)
212-720-6831 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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