Is there any relationship between exchange rate and investment ? evidence from Australia

Ariff Daud and Abul Masih

MPRA Paper from University Library of Munich, Germany

Abstract: This paper makes an attempt to test the possible relationship between exchange rate and investment. Australia is used as a case study. It is interesting to discover the relationship, as the policy makers can use the exchange rate to encourage or discourage investment. The methods used are the standard time-series techniques. The findings based on variance decompositions analysis tend to indicate that investment is driven by exchange rate and followed by inflation rate. The findings are plausible and have strong policy implications for commodity-producing countries like Australia.

Keywords: exchange rate; investment; inflation; Australia (search for similar items in EconPapers)
JEL-codes: C22 C58 E44 G15 (search for similar items in EconPapers)
Date: 2017-08-16
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