Exchange rate uncertainty and investment in Latin America an empirical investigation by Carmen A. Li

Cover of: Exchange rate uncertainty and investment in Latin America | Carmen A. Li

Published by Essex University, Department of Economics in Essex .

Written in English

Read online

Edition Notes

Book details

Statementby Carmen A. Li and FernandoSeabra.
SeriesEconomics discussion paper series / Essex University, Department of Economics -- no.430, Economics discussion paper (Essex University, Department of Economics) -- no.430.
ContributionsSeabra, Fernando.
ID Numbers
Open LibraryOL17287894M

Download Exchange rate uncertainty and investment in Latin America

Using exchange rate uncertainty (ERU) and sociopolitical instability (SPI) as measures of macroeconomic imbalances and political disorder, respectively, we investigate the link between these two factors and private investment in Latin America.

The analysis shows that while ERU and SPI negatively impact private investment jointly, the individual Cited by: Get this from a library.

Real exchange rate uncertainty and private investment in developing countries. [Luis Servén] -- Serven examines empirically the link between real exchange rate uncertainty and private investment in developing countries using a large cross country-time series data set.

He builds a GARCH-based. Exchange Rate Uncertainty, Socio-Political Instability and Private Investment: Empirical Evidence from Latin America Review of Development Economics, Vol. 12, Issue 2, pp.May 14 Pages Posted: 31 Mar Cited by: Exchange Rate Uncertainty, Sociopolitical Instability and Private Investment: Empirical Evidence from Latin America.

Exchange Rate Uncertainty, Socio-Political Instability and Private Investment: Empirical Evidence from Latin America Article in Review of Development Economics 12(2) May with 63 Reads. By decomposing exchange rate uncertainty into temporary (short-run) and permanent (long-run) components, we further explore whether the nature of uncertainty matters.

Our empirical findings support the view that exchange rate uncertainty has a negative impact on U.S. investment flows into Latin America. In addition, the negative impact of real exchange rate uncertainty on investment is significantly larger in economies that are highly open and in those with less developed financial systems.

This paper—a product of the Office of the Chief Economist, Latin America and the Caribbean Region—is part of a larger effort in the region to assess. Latin America and the Caribbean Region Office of the Chief Economiest April analytical literature as well as the empirical studies on real exchange rate uncertainty and investment.

Section 3 lays out the paper's econometric methodology, and section. There is no consensus on the most appropriate method with which to calculate exchange rate uncertainty in existing empirical studies.

Following Darby et al. (), we use the time series standard deviation of monthly industry-specific exchange rate returns over the year to measure exchange rate industry-specific exchange rate volatility is then measured by 7: (3). Exchange rate uncertainty and investment in Latin America book Foreign Direct Investment, Exchange Rate Variability and Demand Uncertainty Abstract Variable real exchange rates influence the location of production facilities chosen by a multinational.

With risk averse investors and fixed productive factors, parent companies should not be indifferent to production location, even with identical expected costs of.

Downloadable. This paper provides new empirical evidence on the relationship between real effective exchange rate uncertainty and aggregate investment in six Latin American economies.

Its main contributions are that it explicitly tests for linear as well as non-linear effects of uncertainty in a time-series model that allows the country-specific interpretation. Latin America and the Caribbean projected GDP Growth % % per capita total Exports structure.

with John Welch () “Exchange Rate Uncertainty and Economic Growth in Latin America" Federal Reserve Bank of Dallas, Research Paper # (coauthored with John Welch), March with John Welch () "Real Exchange Rates and Investment Booms in Latin America" in P roceedings of Federal Reserve Bank of Dallas North American Free Trade.

Abstract. This study investigates the effects of exchange rate uncertainty and political risk, after controlling for the conventional macroeconomic determinants, on remittances transfers into eight Latin American countries during the period of Tobacco farmers have engaged the Reserve Bank of Zimbabwe (RBZ) to address concerns over fixed Zimbabwe dollar exchange rate amid uncertainty on the actual date for the start of this year's golden.

He draws a distinction between sample variability and uncertainty, constructs alternative measures of the volatility of innovations to five key macroeconomic variables (inflation, growth, the terms of trade, the real exchange rate, and the price of capital goods), and examines their association with aggregate private investment.

This paper provides new empirical evidence on the relationship between real effective exchange rate uncertainty and aggregate investment in six Latin American economies.

Get this from a library. Real Exchange Rate Uncertainty and Private Investment in Developing Countries. [Luis Servén; World Bank.] -- Servén examines empirically the link between real exchange rate uncertainty and private investment in developing countries using a large cross country-time series data set.

He builds a GARCH-based. Hooper, Peter and Steven Kohlhagen, “The effect of exchange rate uncertainty on the Prices and volume of International Trade”, Journal of International Economics, Vol. 8,pp. Latin America Outlook 4Q17 China: GDP growth (%) Slight upward revision of our growth forecast, due to better incoming data on 1S17 Deceleration in due to lower impulse from economic policies and exchange rate appreciation Uncertainty about the outcome of the upcoming Communist Party Congress Long-run risks remain, even.

This paper to obtain an ex ante measure of exchange rate uncertainty in 11 Latin American countries. As a preliminary issue, the purchasing power parity (PPP) condition is tested using Engle and Granger two-step procedure and Johansen method.

The argument is that exchange rate uncertainty could be lower if PPP holds in the long run. Using exchange rate uncertainty (ERU) and sociopolitical instability (SPI) as measures of macroeconomic imbalances and political disorder, respectively, we investigate the link between these two factors and private investment in Latin America.

The analysis shows that while ERU and SPI negatively impact private investment jointly, the individual impact of ERU is much greater than that of.

We also assess the heterogeneity in responses between EMEs in Latin America and the rest of EMEs by allowing the effects of the US uncertainty shock to be different across the two subgroups.

It is found that Latin American EMEs suffer less in terms of a decrease in output, stock prices, and exchange rates, but experience a more persistent. This study attempts to suggest empirical evidence about the impact of exchange rate uncertainty on the domestic investment for 25 emerging markets and developing economies (EMDEs) for the time line covering the years between and Exchange rate uncertainty is modeled by selecting one of the volatility models of GARCH(1, 1), EGARCH(1, 1), or GJR-GARCH(1, 1) for.

"Foreign Direct Investment, Exchange Rate Variability and Demand Uncertainty," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol.

36(4), pagesNovember. to real exchange rate changes, since higher uncertainty is perceived as a lower expected real exchange rate for any given currently high real exchange rate.

In this article we are concerned with the effects of changes in uncertainty given the expected real exchange rate. This content downloaded from on Tue, 31 Jan UTC. Exchange Rates and Monetary Policy Uncertainty Weempirically studycurrency riskpremiaonannouncement days byrelying on 20 years of high-frequency data from to for the 10 most traded currencies.

We find that, in line with our theoretical model, a simple trad-ing strategy that is short the U.S. dollar and long the other currencies. exchange rate uncertainty on the exports of all these countries. Furthermore, the empirical results derived in this paper are also consistent with recent studies showing a significant negative (long-run) impact of exchange rate volatility on export flows for developing countries outside of Latin America (e.g., Arize et al., ; Bahmani-Oskooee.

Latin America Outlook 3Q17 Global risks most relevant for Latin America are related to US policies and rebalancing in China 12 3 2 4 1 Lingering uncertainty about economic policies to be implemented in US, though the risk of protectionism is reduced Policy stimulus in China to support investment continues to accumulate financial vulnerabilities.

Latin American countries' GDP growth has weakened, posing difficulties for issuers in the region. Policy uncertainty remains the biggest drag on economic prospects as investors remain hesitant about new administrations' ability to address financial and economic headwinds.

Carlos Alfredo Rodriguez Interest Rates in Latin America The uncertainty about the exchange rate rule and at raising the efficiency of investment (as stuted in Latin America and the Caribbean: A Decade After the Debt Crisis, LAC, IBRD, September ).

Since the initial efforts at reform were taken in the early 's, some. rates, which compare a much larger basket of goods and services to U.S. dollar prices, show similar-sized real exchange rate discounts across the region: 30% in Brazil and Chile; 40% in Mexico and Colombia; and 50% in Peru.

Why are cheap goods and services in Latin America evidence to. Foreign Direct Investment, Exchange Rate Variability and Demand Uncertainty Linda S. Goldberg, Charles D. Kolstad. NBER Working Paper No. Issued in August NBER Program(s):International Finance and Macroeconomics. Variable real exchange rates influence the country choice for location of production facilities by a multinational enterprise.

Market Snapshot Dow, S&P finish lower but Nasdaq books a gain ahead of parade of earnings from megacap tech-related firms Published: J at p.m. Doc Name Interest rates in Latin America; Keywords. lending rate;small and medium enterprise;access to international market;lending spread;path of interest rate;local currency market;real rate;Exchange rate policies;exchange.

Latin American countries have a shaky history when it comes to stable foreign exchange. Several countries are facing economic and political upheaval, which may significantly impact the value of their currencies.

Using the Moody’s Analytics Currency Depreciation Ind icator, we evaluate the coming year for 15 Latin American countries. The. Recession in Latin America and the Caribbean.

At the end of the third quarter, the forecast for Latin America and the Caribbean indicates a recession for a second consecutive year. However, looking beyond the numbers, there is some good news amid the current uncertainty.

The first sudden stop involves the economic paralysis stemming from the lockdowns imposed to protect public health. A mobility tracker developed by the Inter-American Development Bank for 20 Latin American and Caribbean (LAC) countries shows that between the second week of March and the third week of June, the number of people traveling more than one kilometer daily fell by levels.

The simple average GDP per capita at PPP exchange rates of 26 countries in Latin America and the Caribbean is around US$14, Chile, Panama, and Uruguay have done remarkably well in recent years, with per-capita income now above $21, for all three and predicted to surpass $25, by Macroeconomic uncertainty is a major challenge facing policymakers.

Exchange rate is usually associated with high level of volatility in developing economies. This has potential effect on other economic variables such as investment.

This paper empirically examines the impact of exchange rate uncertainty on private investment in the BRICS bloc. Using cross-country time series data from. Fitch Ratings downgraded Mexico’s debt for the second time in less than a year, lowering its rating by one notch to the lowest investment grade.

Cushman, D.O., "Exchange Rate Uncertainty and Foreign Direct Investment in the United States" Weltwirtschaftliches Archiv () Froot, K., and J. Stein, "Exchange Rates and Foreign Direct Investment: An Imperfect Capital Markets Approach", Quarterly Journal of.

Dow ends slightly lower as blue chips, S&P book weekly gains Published: J at p.m. ET.

94151 views Friday, November 6, 2020