An Evaluation of the Contractionary Devaluation Hypothesis

Recent empirical and theoretical literature on the impact of real exchange rate devaluations on economic performance questions the traditional expansionary effect generated within standard Mundell-Fleming models. Contractionary devaluations may arise when firms face maturity or currency mismatches that, when faced with real exchange rate depreciations, lead to balance-sheet effects that erode firms' wealth and lead to an output contraction. While some authors show that the standard Mundell-Fleming result may hold even in the presence of currency mismatches, others point out that, if the balance sheet effect is large enough, devaluations can be contractionary. Using a large panel of 57 countries across the world and various newly constructed measures of dollarization, we test whether the balance sheet effect hypothesis has been relevant during the past decades in explaining economic downturns. Additionally, we explore the channels through which devaluations can be contractionary; in particular, we explore whether investment and consumption decisions are negatively affected by exchange rate devaluations under currency mismatches

Determinants of Corporate Exchange Rate Exposure and Implications for Investors: Evidence from Chilean Firms

This paper investigates the impact of exchange rate fluctuations on the value of nonfinancial firms in Chile. Using a detailed dataset on firms' foreign activities, the potential determinants of the identified exposure are examined. Foreign exchange exposure depends on the levels of foreign currency debt and foreign currency assets. Levels of tradeables (exports and imports) do not explain exposure. Chilean firms attempt real hedges through matching foreign assets and income with foreign debt. Also firms use debt and liquidity to reduce exposure in addition to any possible derivative usage. Other firm characteristics which proxy for corporate hedging are not significant. Further, using a portfolio approach, it is demonstrated that for an investor holding exposed firms, exchange rate variations yield economically significant returns during periods of currency depreciation and appreciation

Flexible Exchange Rate with Inflation Targeting in Chile: Experience and Issues

The first five years of the flexible exchange rate and inflation targeting regime in Chile have shown positive results. Inflation is under control, the exchange rate has moved with the external conditions, monetary policy has been countercyclical and the cycle has apparently smoothened. Even though exchange rate volatility has increased, as expected with a flexible regime, this has also happened in other countries with similar characteristics. This increased volatility has lower extreme real exchange rate valuations than in the past, as is also seen in other countries with alternative exchange rate regimes. Important progress in derivatives market deepening, as well in a lower pass-through from the exchange rate to inflation, have contributed to increasing the credibility and feasibility of the current policy framework, while minimizing potential costs derived from that framework

Ecological monitoring as a conservation management tool: the conceptual basis and structure of the Ecological Monitoring Programme for Costa Rica?s Protected Areas and Biological Corridors (PROMEC-CR)

1 tab. 31 ref.PROMEC-CR es implementado por el Sistema Nacional de ?reas de Conservaci?n del Ministerio del Ambiente,Energ?a y Telecomunicaciones. En su primera fase,el Programa evaluar? el estado de conservaci?n de la biodiversidad a escala nacional, a trav?s de tres indicadores enfocados en la extensi?n y el grado de fragmentaci?n de la cobertura de ecosistemas naturales y sus tasas de cambio, as? como en la efectividad de manejo de las ?reas protegidas. A la vez, se desarrollar?n y probar?n seis indicadores adicionales potenciales que ofrezcan una evaluaci?n m?s integral de la biodiversidad, abarcando aspectos claves de los corredores biol?gicos, grupos faun?sticos y din?mica de los bosques. La amenaza grave que representa el cambio clim?tico ser? monitoreada directamente por un indicador y como componente expl?cito de todos los dem?s. The PROMEC-CR ... is being implemented by the National System of Conservation Areas of the Ministry of Environment, Energy and Telecommunication. In its first phase, the Program will evaluate the conservation status of biodiversity at the national scale through three indicators focusing on, respectively, cover and fragmentation of natural ecosystems and their rates of change, and the effectiveness of protected areas management. At the same time, six additional indicators will be developed and tested, these providing a more integral evaluation of biodiversity covering key aspects of biological corridors, fauna groups and forest dynamics. The grave threat raised by climate change will be monitored directly by one indicator and as an explicit component of the monitoring of all the others