Investment, devaluation, and foreign currency exposure: The case of Mexico

• 成果类型: Article
• 署名作者: Aguiar, M
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Boston
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2004.06.012
• 发表日期: 2005
• 页码: 95-113
• 关键词: investment; financial constraints; balance sheets; emerging market crises

摘要

This paper studies firm-level investment in the wake of the Mexican peso crisis of 1994. While exporters outperform nonexporters in terms of profits and sales after the devaluation, their investment is constrained by weak balance sheets. Specifically, we find that firms with heavy exposure to short-term foreign currency debt before the devaluation experienced relatively low levels of post-devaluation investment. The data also imply that increased sales uncertainty after the peg's collapse deterred investment, particularly in the tradable sector. The results confirm the recent theoretical literature's focus on weak balance sheets as driving the recessionary impact of devaluations in emerging markets. (c) 2005 Elsevier B.V. All rights reserved.