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Exchange Rate Implications for Australian Manufacturing Investment and Exports

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Author Info

  • Swift, Robyn

    (Griffith Business School, Griffith University, Nathan Queensland Australia)

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    Abstract

    This paper uses time series data on individual industries to examine the relationship between exchange rates and investment for Australian manufacturing. The results show that the investment response to exchange rate changes for the total manufacturing sector varies positively with the export share of sales and negatively with the imported input use, but most individual industries do not show similar effects. The level of import competition is not a significant influence for either the total manufacturing sector or for individual industries. Exchange rate effects are limited to investment in equipment plant and machinery, with little impact on investment in buildings and structures.

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    Bibliographic Info

    Article provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).

    Volume (Year): 37 (2007)
    Issue (Month): 2 (September)
    Pages: 145-162

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    Handle: RePEc:eap:articl:v:37:y:2007:i:2:p:145-162

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    Related research

    Keywords: Exchange Rate; Exports; Import; Investment; Manufacturing;

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Jose Campa & Linda S. Goldberg, 1993. "Investment in Manufacturing, Exchange-Rates and External Exposure," NBER Working Papers 4378, National Bureau of Economic Research, Inc.
    2. Robyn Swift, 2005. "The Changing External Exposure of Australian Industry," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 38(3), pages 253-264, 09.
    3. Driver, Ciaran & Dowrick, Steve, 1997. "Investment Intentions as an Indicator of Actual Investment in Australian Manufacturing," Australian Economic Papers, Wiley Blackwell, vol. 36(68), pages 90-105, June.
    4. José Manuel Campa & Linda S. Goldberg, 2005. "Exchange Rate Pass-Through into Import Prices," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 679-690, November.
    5. Beveridge, Stephen & Nelson, Charles R., 1981. "A new approach to decomposition of economic time series into permanent and transitory components with particular attention to measurement of the `business cycle'," Journal of Monetary Economics, Elsevier, vol. 7(2), pages 151-174.
    6. Pinelopi Koujianou Goldberg & Michael M. Knetter, 1997. "Goods Prices and Exchange Rates: What Have We Learned?," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1243-1272, September.
    7. Ian Domowitz & R. Glenn Hubbard & Bruce C. Petersen, 1986. "Business Cycles and the Relationship Between Concentration and Price-Cost Margins," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 1-17, Spring.
    8. Jose Campa & Linda S. Goldberg, 1995. "Investment, Pass-Through and Exchange Rates: A Cross-Country Comparison," NBER Working Papers 5139, National Bureau of Economic Research, Inc.
    9. Dornbusch, Rudiger, 1987. "Exchange Rates and Prices," American Economic Review, American Economic Association, vol. 77(1), pages 93-106, March.
    10. Nucci, Francesco & Pozzolo, Alberto F., 2001. "Investment and the exchange rate: An analysis with firm-level panel data," European Economic Review, Elsevier, vol. 45(2), pages 259-283, February.
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