IDEAS home Printed from https://ideas.repec.org/a/fis/journl/260207.html

Exchange-Rate-Investment Link: Industry-Level Evidence for OECD Countries

Author

Listed:
  • Duygu YOLCU KARADAM

Abstract

This study investigates whether investment reacts differently to exchange rate movements across industries. Using a broad panel of OECD countries including both advanced and emerging economies, we estimate the impact of exchange rate levels and volatility on sectoral investment. To this end, two disaggregated datasets are employed: Total investment across 10 major industries and manufacturing investment across 10 manufacturing sub-sectors. We estimate investment equations for aggregate investment as well as individual sectors employing Pooled Mean Group method which enables us to identify short and long run effects and account for country heterogeneity. The results show that changes in the level and volatility of exchange rates affect sectoral investment mainly in the long run. Higher exchange rate volatility generally reduces investment in most of the industries. However, the effect of exchange rate levels varies considerably across sectors. Real depreciations tend to lower sectoral investment, except for Manufacturing and Services sectors. While a weaker currency boosts investment in aggregate manufacturing, it has no significant long-run effect on most service industries. Within manufacturing, depreciation reduces investment in low-technology industries but supports investment in medium- and high-technology sectors.

Suggested Citation

  • Duygu YOLCU KARADAM, 2026. "Exchange-Rate-Investment Link: Industry-Level Evidence for OECD Countries," Fiscaoeconomia, Tubitak Ulakbim JournalPark (Dergipark), issue 2.
    • Handle: RePEc:fis:journl:260207
    DOI: 10.25295/fsecon.1841127
    as

    Download full text from publisher

    File URL: https://dergipark.org.tr/en/download/article-file/5502307
    Download Restriction: no
    File URL: https://libkey.io/10.25295/fsecon.1841127?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fis:journl:260207. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emre Atsan (email available below). General contact details of provider: https://dergipark.org.tr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.