Read full paper at: http://www.scirp.org/journal/PaperInformation.aspx?PaperID=53594#.VMnk_CzQrzE Author(s) Pham Van Dai Affiliation(s) Finders Business School, Flinders University, Adelaide, Australia . 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. KEYWORDS Real Exchange Rate , Depreciation , Capital Accumulation , 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. ...
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