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On The Link between Real Exchange Rate and Domestic Investment: Asymmetric Evidence from Africa

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  • Mohsen Bahmani-Oskooee and Abera Gelan

    (University of Wisconsin-Milwaukee)

Abstract

Exchange rate changes are said to affect the level of domestic direct investment in either direction. In this paper we consider the experience of each of the 18 countries in Africa. When a linear model is used, we find that the real effective exchange rate has significant short-run effects on domestic investment in three countries and long-run effects in five countries. However, when a nonlinear model was used, the number of countries rose to 13 and seven respectively. Furthermore, in almost all countries, the short-run and long-run effects were asymmetric

Suggested Citation

  • Mohsen Bahmani-Oskooee and Abera Gelan, 2019. "On The Link between Real Exchange Rate and Domestic Investment: Asymmetric Evidence from Africa," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 44(3), pages 1-17, September.
    • Handle: RePEc:jed:journl:v:44:y:2019:i:3:p:1-17
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    Cited by:

    1. Mohsen Bahmani-Oskooee & Jungho Baek, 2021. "Exchange rate volatility and domestic investment in G7: are the effects asymmetric?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 48(3), pages 775-799, August.
    2. Guimin Lu & Jungo Baek & Soojoong Nam, 2022. "On the Relation between Exchange Rates and Domestic Investment: Asymmetric Evidence from China's 31 Provinces," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 55(4), pages 477-488, December.
    3. Mohsen Bahmani‐Oskooee & Jungho Baek, 2020. "On the asymmetric effects of the real exchange rate on domestic investment in G7 countries," Australian Economic Papers, Wiley Blackwell, vol. 59(4), pages 303-318, December.

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    More about this item

    Keywords

    Domestic investment; Real exchange rate; Asymmetry analysis; Africa;
    All these keywords.

    JEL classification:

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

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