With the Lunch Seminar series, the Department of Finance is bringing eminent and up-and-coming researchers from around the world to Luxembourg.
Abstract:
In their income statements, firms report their foreign exchange (FX) transaction income, i.e., the overall effect of exchange rate-induced revaluations of their monetary items, notably cash, accounts receivables and payables, and debt, all net of any financial hedging. Using such publicly available data, we revisit the exchange rate disconnect puzzle at the firm level in six major currency areas. We find that some firms report large values of FX transaction income that vary with net trade exposure and foreign currency debt, and that this FX transaction income passes through to their profits. Since firms do not fully hedge their exchange rate exposure, FX shocks affect their profits.
The seminar will be held in place.
Cold lunches are provided to registered participants.
This event is Supported by the Luxembourg National Research Fund (RESCOM/2023/LE/17984041)
