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Currency Depreciations, Financial Transfers, and Firm Heterogeneity

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  • Michael Brei

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Matthieu Charpe

Abstract

The present paper investigates five episodes of currency collapse from the perspective of non-financial firms operating in Argentina, Brazil and Mexico. We focus on two aspects: wealth and income transfers from borrowing firms to lenders and firm heterogeneity. At the firm level, we find that the currency collapses are preceded and associated with sharply rising financial transfers from firms to lenders. The debt and income structure is central in explaining the asymmetric firm dynamics. Most affected are firms with high levels of unhedged foreign-currency debt. At the country level, Argentina, Brazil, and Mexico display three contrasting examples. Argentina has a large currency mismatch, Brazil balances the currency denomination of debt and income (natural hedge), and Mexico occupies an intermediate position.
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  • Michael Brei & Matthieu Charpe, 2012. "Currency Depreciations, Financial Transfers, and Firm Heterogeneity," Post-Print hal-01410550, HAL.
    • Handle: RePEc:hal:journl:hal-01410550
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    Cited by:

    1. Brei, Michael & Buzaushina, Almira, 2015. "International financial shocks in emerging markets," Journal of International Money and Finance, Elsevier, vol. 58(C), pages 51-74.

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    More about this item

    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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