Investment and exchange rate uncertainty under different regimes

This paper examines the impact of the exchange rate uncertainty on investment under different exchange rate regimes. The paper presents a theoretical model where exchange rate is a stochastic process and investment behaves as an American option with dividends. The paper evaluates the performance of...

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Autor principal:	Cristiano Aguiar de Oliveira
Formato:	article
Lenguaje:	EN PT
Publicado:	Universidade de São Paulo 2014
Materias:	Exchange Rate Regimes Uncertainty Investment Real Options Economics as a science HB71-74
Acceso en línea:	https://doaj.org/article/6d55675a206b4b1781185916a114c11d
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spelling	oai:doaj.org-article:6d55675a206b4b1781185916a114c11d2021-11-24T16:03:48ZInvestment and exchange rate uncertainty under different regimes0101-41611980-5357https://doaj.org/article/6d55675a206b4b1781185916a114c11d2014-09-01T00:00:00Zhttps://www.revistas.usp.br/ee/article/view/52384https://doaj.org/toc/0101-4161https://doaj.org/toc/1980-5357 This paper examines the impact of the exchange rate uncertainty on investment under different exchange rate regimes. The paper presents a theoretical model where exchange rate is a stochastic process and investment behaves as an American option with dividends. The paper evaluates the performance of the investment under free float, fixed and intermediate exchange rate regimes (managed float and crawling peg). The comparison among the different regimes shows that the crawling peg has advantages when compared to other regimes. The regime stability implies that less currency devaluations are necessary to stimulate investment, especially when there is a significant loss of market power in foreign markets. Cristiano Aguiar de OliveiraUniversidade de São PauloarticleExchange Rate RegimesUncertaintyInvestmentReal OptionsEconomics as a scienceHB71-74ENPTEstudos Econômicos, Vol 44, Iss 3 (2014)
institution	DOAJ
collection	DOAJ
language	EN PT
topic	Exchange Rate Regimes Uncertainty Investment Real Options Economics as a science HB71-74
spellingShingle	Exchange Rate Regimes Uncertainty Investment Real Options Economics as a science HB71-74 Cristiano Aguiar de Oliveira Investment and exchange rate uncertainty under different regimes
description	This paper examines the impact of the exchange rate uncertainty on investment under different exchange rate regimes. The paper presents a theoretical model where exchange rate is a stochastic process and investment behaves as an American option with dividends. The paper evaluates the performance of the investment under free float, fixed and intermediate exchange rate regimes (managed float and crawling peg). The comparison among the different regimes shows that the crawling peg has advantages when compared to other regimes. The regime stability implies that less currency devaluations are necessary to stimulate investment, especially when there is a significant loss of market power in foreign markets.
format	article
author	Cristiano Aguiar de Oliveira
author_facet	Cristiano Aguiar de Oliveira
author_sort	Cristiano Aguiar de Oliveira
title	Investment and exchange rate uncertainty under different regimes
title_short	Investment and exchange rate uncertainty under different regimes
title_full	Investment and exchange rate uncertainty under different regimes
title_fullStr	Investment and exchange rate uncertainty under different regimes
title_full_unstemmed	Investment and exchange rate uncertainty under different regimes
title_sort	investment and exchange rate uncertainty under different regimes
publisher	Universidade de São Paulo
publishDate	2014
url	https://doaj.org/article/6d55675a206b4b1781185916a114c11d
work_keys_str_mv	AT cristianoaguiardeoliveira investmentandexchangerateuncertaintyunderdifferentregimes
_version_	1718414879569739776

Investment and exchange rate uncertainty under different regimes

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