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Sectoral R&D intensity and exchange rate volatility: a panel study for OECD countries

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  • Mahagaonkar, Prashanth
  • Schweickert, Rainer
  • Chavali, Aditya S.

Abstract

A recent literature has pointed at potential negative effects of exchange rate volatility on innovation. In this paper, we propose that there may be a direct effect as well as an indirect effect via export activity. We test these hypotheses for sectoral R&D intensities using OECD panel data for manufacturing and services sectors for 14 OECD economies and the years 1987 - 2003. We find that the direct negative effect of volatility is pronounced in manufacturing sector but is dominated by the indirect effect via the export channel. Services do not face any effects of volatility on R&D intensities. While it is not clear which channel dominates our results confirm that there is a negative volatility affect related to openness on a sectoral level.

Suggested Citation

  • Mahagaonkar, Prashanth & Schweickert, Rainer & Chavali, Aditya S., 2009. "Sectoral R&D intensity and exchange rate volatility: a panel study for OECD countries," Kiel Working Papers 1531, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwkwp:1531
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    References listed on IDEAS

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    Cited by:

    1. Diego Bastourre & Luis Casanova & Alejo Espora, 2011. "Tipo de Cambio Real y Crecimiento: Síntesis de la Evidencia y Agenda de Investigación," Department of Economics, Working Papers 082, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata.

    More about this item

    Keywords

    R&D intensity; Innovation; Real Exchange Rate; Volatility; Exports; OECDCountries;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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