TEL  Vol.5 No.1 , February 2015
A Note on the Investment-Enhancing Effect of a Depreciated Real Exchange Rate
Author(s) Pham Van Dai
ABSTRACT
This paper presents a mechanism through which 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.
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