Exchange Rates and Cash Flows in Differentiated Product Industries : A Simulation Approach  

Oleh:

Friberg, Richard ; Ganslandt, Mattias

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Journal of Finance (EBSCO) vol. 62 no. 5 (Oct. 2007), page 2475-2502.
Topik: exchange rates; exchange rates; cash flows; product industries; simulation approach
Fulltext: p 2475.pdf (266.24KB)

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Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ88 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

How do exchange rate changes impact firms' cash flows ? We extend a simulation method developed in industrial organization to answer this question. We use prices, quantities, and product characteristics for differentiated products, coupled with a discrete choice framework and an assumption of price competition, to estimate marginal costs for all procedures. Using a monte carlo approach we generate conterfactual prices and profits for different levels of exchange rates. We illustrate the method using the market for bottled water. Our results stress that even in a relatively simple market such as this one, different brands face very different exchange rate risks.

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