The Impact of Exchange Rate Uncertainty on the Level of Investment

Datos Bibliográficos

ID9716461
AutoresJulia Darby (0000-0003-4425-7222, University of Glasgow), Andrew Hughes Hallett (0000-0002-2924-6018, University of Strathclyde and CEPR, London), Jonathan Ireland (University of Strathclyde), Laura Piscitelli (University of Strathclyde)
Año1999
Volumen109
Número454
Páginas55-67
Fecha de publicación1999-03-01
Peer ReviewedSí
Open AccessSí
TipoARTICLE
RevistaThe Economic Journal (JOURNAL)
Identificadores de la revistaISSN: 0013-0133 • E-ISSN: 1468-0297
EditorialOxford University Press (OUP) (PUBLISHER)
DOI10.1111/1468-0297.00416
OpenAlexW2168231350
IdiomaEN
Citas recibidas10
Referencias citadas7

Conventional wisdom has it that increasing price or exchange rate uncertainty will depress investment. Using the Dixit–Pindyck model, we find that there are situations where this will happen; and situations where it does not. There are threshold effects which allows us to identify when rising volatility would increase or decrease investment; and also to identify which types of industries would gain, and which would suffer, from a move to fixed exchange rates. This is important for monetary union in Europe since it is likely that, even if trade is insensitive to exchange rate volatility, investment with its longer horizon will be affected

Econometrics · Economics · Exchange rate · International economics · Investment (military · Monetary economics · Volatility (finance · Capital Investment and Risk Analysis · Economic Growth and Productivity · Monetary Policy and Economic Impact