The Effects of the Exchange Rate on Japanese Firms' Investment: An Analysis with Firm-Level Data
Although the effects of the exchange rate on firms' investment were mostly analyzed with semi-macro data by industry, in recent years analyses using firm-level panel data have been developed. Nucci and Pozzolo (2001) analyzed using Italian firm-level panel data and reported that an appreciation of the exchange rate has a negative effect on firms' investment as its export ratio is higher, whereas it has a positive effect on firms' investment as their import ratio is higher. Furthermore, the effects of the appreciation of the exchange rate on investment are stronger in firms with low market power and facing the financial constraints. This paper analyzes the effects of an appreciation of the yen on investment with Japanese firm-level panel data, and a similar result to Nucci and Pozzolo's (2001) was obtained. It also conducted a simulation using the empirical results and showed, in five industries with high export ratio, the real investment decreases by 0.45% to 0.95% point to 1% point appreciation of the real effective exchange rate, whereas in the industry of petroleum products and coal products, real investment increases by 1.36% point to 1% point appreciation of the real effective exchange rate.
Volume (Year): 8 (2012)
Issue (Month): 5 (November)
|Contact details of provider:|| Web page: http://www.mof.go.jp/pri/|
More information through EDIRC
References listed on IDEAS
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.:
- Yoichi Matsubayashi, 2011.
"Exchange Rate, Expected Profit And Capital Stock Adjustment: Japanese Experience,"
The Japanese Economic Review,
Japanese Economic Association, vol. 62(2), pages 215-247, 06.
- Yoichi Matsubayashi, 2009. "Exchange Rate, Expected Profit, and Capital Stock Adjustment: Japanese Experience," Discussion Papers 0828, Graduate School of Economics, Kobe University.
- Campa, Jose Manuel & Goldberg, Linda S, 1999.
"Investment, Pass-Through, and Exchange Rates: A Cross-Country Comparison,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(2), pages 287-314, May.
- 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.
- Jose Manuel Campa & Linda S. Goldberg, 1996. "Investment, pass-through, and exchange rates: a cross-country comparison," Staff Reports 14, Federal Reserve Bank of New York.
- Campa, Jose & Goldberg, Linda, 1995. "Investment, Pass-Through and Exchange-Rates: A Cross-Country Comparison," Working Papers 95-14, C.V. Starr Center for Applied Economics, New York University.
- Blundell, Richard & Bond, Stephen, 1998.
"Initial conditions and moment restrictions in dynamic panel data models,"
Journal of Econometrics,
Elsevier, vol. 87(1), pages 115-143, August.
- Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
- R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
- Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
- Goldberg, L.S. & Campa, J., 1993.
"Investment in Manufacturing, Exchange-Rate and External Exposure,"
93-18, C.V. Starr Center for Applied Economics, New York University.
- Campa, Jose & Goldberg, Linda S., 1995. "Investment in manufacturing, exchange rates and external exposure," Journal of International Economics, Elsevier, vol. 38(3-4), pages 297-320, May.
- Jose Campa & Linda S. Goldberg, 1993. "Investment in Manufacturing, Exchange-Rates and External Exposure," NBER Working Papers 4378, National Bureau of Economic Research, Inc.
- Arellano, Manuel & Bover, Olympia, 1995.
"Another look at the instrumental variable estimation of error-components models,"
Journal of Econometrics,
Elsevier, vol. 68(1), pages 29-51, July.
- M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
- Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
- Francesco Nucci & Alberto Pozzolo, 1998.
"Investment and the Exchange Rate,"
Temi di discussione (Economic working papers)
344, Bank of Italy, Economic Research and International Relations Area.
- Kazuo Ogawa, 2003. "Financial Distress and Corporate Investment: The Japanese Case in the 90s," ISER Discussion Paper 0584, Institute of Social and Economic Research, Osaka University.
When requesting a correction, please mention this item's handle: RePEc:mof:journl:ppr019d. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Policy Research Institute)
If references are entirely missing, you can add them using this form.