Work in Progress
We estimate the causal effects of a shift in the expected future exchange rate of a local currency against the US Dollar on a representative sample of firms in an open economy. We provide the one-year-ahead nominal exchange rate forecast published by local central bank to a random sub-sample of firm managers. The treatment is effective in shifting exchange rate and inflation expectations and perceptions. These effects are persistent and larger for non-exporting firms. Linking survey responses with administrative census data, we find that the treatment affects the dynamics of exports and imports quantities and prices at the firm level, with differential effects for exports to destination countries that use the US dollar as their currency. We instrument exchange rate expectations with the variation induced by the instrument and estimate a positive elasticity of a future expected depreciation on import expenditures.
In Press: Bloomberg
Understanding Which Prices Affect Inflation Expectations (with Chris Campos and Michael McMain) Economic Commentary (Federal Reserve Bank of Cleveland), no. 2022–06 (April)
In Press: NY Times