Exchange rate movements and firm value

Firm Strategy and Economic Exposure to Foreign Exchange Rate Movements

Exchange Rate Exposure and Firm Dynamics

This paper develops a firm-dynamics model with heterogenous firms and endogenous currency debt composition to jointly study financing and investment decisions in developing economies. In our model, foreign currency borrowing arises from a trade-off between aggregate deviations from the risk-free uncovered interest rate parity and firms’ growth potential. Crucially, there is crosssectional heter...

Exchange Rate Uncertainty and Firm Pro

1 Introduction

The Contribution of Observed and Unobserved Fundamentals to Exchange Rate Movements in Iran

Using a State-space model, this paper investigates the contribution of both observed and unobserved fundamentals to nominal exchange rate movement in Iran for the period 1991:2-2011:4. To this end, we follow Engel and West (2005) and Balke et al. (2013) and use an asset-pricing approach to develop a rational expectations present value exchange rate model. In order to examine the role of fun...

Firm Liquidation and Economic Crisis under Unexpected Exchange Rate Shock

This paper studies the causes, mechanisms and consequences of decreasing firm value and welfare loss in an economy under a fixed exchange rate regime when there is an unexpected appreciation in domestic currency. We also study the possible economic crisis caused by the exchange rate shock. We consider the established production capacity as well as the training of firmspecific labors before prod...