The Economic Consequences of Dollar Appreciation for US Manufacturing Investment: A Time-Series Analysis
AbstractThis article analyses the effects of the real value of the dollar on investment in US domestic manufacturing using aggregate data for 1973-2004. Econometric estimation shows a negative effect that is much larger than has been found in any previous study. The exchange rate affects investment mainly, although not exclusively, through the channel of financial or liquidity constraints, rather than by affecting the desired stock of capital. Counterfactual simulations show that US manufacturing investment would have been 61% higher and the capital stock would have been 17% higher in 2004 if the dollar had not appreciated after 1995.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal International Review of Applied Economics.
Volume (Year): 21 (2007)
Issue (Month): 4 ()
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Other versions of this item:
- Robert A. Blecker, 2006. "The Economic Consequences of Dollar Appreciation for US Manufacturing Investment: A Time-Series Analysis," Working Papers 2006-07, American University, Department of Economics.
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- F31 - International Economics - - International Finance - - - Foreign Exchange
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
- E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
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