Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/266971
Year of Publication: 
2021
Citation: 
[Journal:] EconomiA [ISSN:] 1517-7580 [Volume:] 22 [Issue:] 1 [Publisher:] Elsevier [Place:] Amsterdam [Year:] 2021 [Pages:] 19-37
Publisher: 
Elsevier, Amsterdam
Abstract: 
In third generation currency crises models, balance sheet losses from currency depreciations propagate the crises into the real sector of the economy. To test these models, we built a firm-level database that allowed us to measure currency mismatches around the 2002 Brazilian currency crisis. We found that between 2001 and 2003, firms with large currency mismatches just before the crisis reduced their investment rates 8.1 percentage points more than other publicly held firms. We also showed that the currency depreciation increased exporters revenue, but those with currency mismatches reduced investments 12.5 percentage points more than other exporters. These estimated reductions in investment are economically very significant, underscoring the importance of negative balance sheet effects in currency crises.
Subjects: 
Investment
Currency mismatches
Currency crises
Hedge
Financial constraints
JEL: 
F32
F34
G31
G32
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article

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