The Federal Reserve Bank of New York works to promote sound and well-functioning financial systems and markets through its provision of industry and payment services, advancement of infrastructure reform in key markets and training and educational support to international institutions.
The Outreach and Education function engages, empowers and educates the Second District communities that the Bank serves, especially civic leaders, students, educators, small business owners, policymakers and the general public. It furthers the Bank's commitment to the region by listening to the communities we serve and leveraging our unique attributes to positively impact school and university programs, as well as analysis and research.
Although large changes in real exchange rates have occurred during the past decades, the real implications of these movements remain an empirical question. Using detailed data from the United States, Canada, the United Kingdom, and Japan, we examine the implications of exchange rates for time series of sectoral investment. Both theoretically and empirically we show that investment responsiveness to exchange rates varies over time, positively in relation to sectoral reliance on export share and negatively with respect to imported inputs into production. Important differences exist in investment endogeneity across high and low markup sectors, with investment in low markup sectors significantly more responsive to exchange rates. Cross-country differences in investment response are only partially explained by industrial organization arguments.
For a published version of this report, see José Manuel Campa and Linda S. Goldberg, "Investment, Pass-Through and Exchange Rates: A Cross-Country Comparison," International Economic Review 40, no. 2 (May 1999): 287-314.