Exchange Rates and Investment Good Prices : A Cross-Industry Comparison

This paper presents estimates of the impact of exchange rate movements on the industry-level price of investment goods using a panel of OECD countries. An exchange rate depreciation (appreciation) causes a significant rise (fall) in the prices of the investment goods used by most industries, but the magnitude of this effect differs greatly across sectors. A currency depreciation causes a stronger increase in the price of investment goods used by industries that produce high-technology products and employ a larger proportion of imported capital. Hence, movements in the exchange rate may affect the level and distribution of investment across sectors