Article ID Journal Published Year Pages File Type
964813 Journal of International Money and Finance 2009 23 Pages PDF
Abstract

Aggregate and sector-level investment equations are estimated for a panel of 17 OECD countries using an error correction methodology. A real currency depreciation is found to reduce aggregate investment and investment in all nine sectors in the short run, and aggregate investment in the long run. The decline in investment is quite persistent in service sectors, sectors that generally benefit less from an expansion of demand following a currency depreciation. A rise in the real wage has no short run impact on investment in most sectors, but has a significant negative long run effect in six of nine sectors.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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