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A Note on the Investment-Enhancing Effect of a Depreciated Real Exchange Rate

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http://www.scirp.org/journal/PaperInformation.aspx?PaperID=53594#.VMnk_CzQrzE

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ABSTRACT
This paper presents a mechanism through which <span "="">a depreciated real exchange rate can lead to a higher investment rate. In an intertemporal framework, it shows that a depreciated real exchange rate can make the tradable sector more profitable and thus a greater requirement for capital. Moreover, the investment-enhancing effect of a depreciated real exchange rate decreases in magnitude when there is higher adjustment cost of investment.
 
Cite this paper
Dai, P. (2015) A Note on the Investment-Enhancing Effect of a Depreciated Real Exchange Rate. Theoretical Economics Letters, 5, 19-23. doi: 10.4236/tel.2015.51004.
 
References
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[9]Razmi, A., Rapetti, M. and Skott, P. (2012) The Real Exchange Rate and Economic Development. Structural Change and Economic Dynamics, 23, 151-169. http://dx.doi.org/10.1016/j.strueco.2012.01.002
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