TY - JOUR
T1 - Corporate foreign currency debt in Brazil
T2 - Will dollar indebted firms invest more after real exchange rate depreciations?
AU - Paz, Lourenco Senne
PY - 2009
Y1 - 2009
N2 - In this article the effect of real exchange rate movements over the investment of Brazilian firms with foreign currency debt is assessed. Moreover, the hypothesis of currency matching between firm s revenues and expenditures will be tested. To do so, a new theoretical model is provided. Contrary to previous results of a positive effect of exchange rate devaluations over investment, our results show that the effect is decreasing on the share of the foreign currency liabilities. For small shares of foreign debt, the effect is positive, but by increasing the share it turns negative. We didn t find evidence of currency matching in our data.
AB - In this article the effect of real exchange rate movements over the investment of Brazilian firms with foreign currency debt is assessed. Moreover, the hypothesis of currency matching between firm s revenues and expenditures will be tested. To do so, a new theoretical model is provided. Contrary to previous results of a positive effect of exchange rate devaluations over investment, our results show that the effect is decreasing on the share of the foreign currency liabilities. For small shares of foreign debt, the effect is positive, but by increasing the share it turns negative. We didn t find evidence of currency matching in our data.
UR - http://www.scopus.com/inward/record.url?scp=68049088684&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=68049088684&partnerID=8YFLogxK
U2 - 10.1080/13504850701335335
DO - 10.1080/13504850701335335
M3 - Article
AN - SCOPUS:68049088684
SN - 1350-4851
VL - 16
SP - 1083
EP - 1088
JO - Applied Economics Letters
JF - Applied Economics Letters
IS - 11
ER -