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Automation Under Constraints: Exchange Rates Interest Rates and Investment

Author

Listed:
  • Meghana Ayyagari
  • Vojislav Maksimovic
  • Rodimiro Rodrigo
  • Ariel Weinberger

Abstract

The yen depreciation from 2012–2015 reduced robot prices for U.S. firms. Paradoxically, financially constrained firms dramatically increased adoption relative to their unconstrained peers. We rationalize this with a collateral model: robots are pledgeable assets requiring non-pledgeable intangibles, raising the effective cash invoice for constrained firms and amplifying their elasticities. Linking robot and automation machinery imports to Compustat, we find constrained firms are twice as responsive to exchange rate and interest rate shocks, with capital prices dominating (45-60% larger) borrowing costs. Results reveal a collateral channel reallocating technology adoption toward constrained incumbents, with implications for technology diffusion and competitive dynamics.

Suggested Citation

  • Meghana Ayyagari & Vojislav Maksimovic & Rodimiro Rodrigo & Ariel Weinberger, 2026. "Automation Under Constraints: Exchange Rates Interest Rates and Investment," CESifo Working Paper Series 12526, CESifo.
    • Handle: RePEc:ces:ceswps:_12526
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    Keywords

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    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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