The effect of the exchange rates on investment in Mexican manufacturing industry

Caglayan, M., Muñoz Torres, R.I. and Muñoz Torres, R.I. 2011. The effect of the exchange rates on investment in Mexican manufacturing industry. Open Economies Review. 22 (4), pp. 669-683.

TitleThe effect of the exchange rates on investment in Mexican manufacturing industry
AuthorsCaglayan, M., Muñoz Torres, R.I. and Muñoz Torres, R.I.
Abstract

This paper, considering revenue and cost exposure channels, investigates the effects of exchange rate on fixed capital investment in Mexican manufacturing sector over 1994–2003. We find that i) currency depreciation has a positive (negative) effect on fixed investment through the export (import) channel; ii) exchange rate volatility impacts mostly export oriented sectors; iii) the sensitivity of investment to exchange rate movements is stronger in non-durable goods sectors and industries with low mark-up ratios.

JournalOpen Economies Review
Journal citation22 (4), pp. 669-683
ISSN0923-7992
YearSep 2011
PublisherSpringer
Digital Object Identifier (DOI)doi:10.1007/s11079-010-9166-0
Publication dates
PublishedSep 2011

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