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Domestic Investment Responses to Changes in the Real Exchange Rate: Asymmetries of Appreciation versus Depreciation

Author

Listed:
  • BAHMANI-OSKOOEE, Mohsen
  • HALICIOGLU, Ferda
  • Neumann, Rebecca

Abstract

We examine how movements in the real exchange rate impact private domestic investment. Importantly, we consider whether investment responds differently to real depreciations versus real appreciations. Using a sample of six emerging markets over 1980 to 2014, we show that considering asymmetric responses provides an important contribution to this literature. Previous mixed results that assume symmetric responses may be better explained by considering such asymmetric effects.

Suggested Citation

  • BAHMANI-OSKOOEE, Mohsen & HALICIOGLU, Ferda & Neumann, Rebecca, 2016. "Domestic Investment Responses to Changes in the Real Exchange Rate: Asymmetries of Appreciation versus Depreciation," MPRA Paper 82941, University Library of Munich, Germany, revised 10 Apr 2016.
  • Handle: RePEc:pra:mprapa:82941
    as

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    File URL: https://mpra.ub.uni-muenchen.de/82941/1/MPRA_paper_82941.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Domestic investment; Real exchange rate; Asymmetry Effects; NARDL;

    JEL classification:

    • F3 - International Economics - - International Finance
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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