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Real Exchange Rate Uncertainty and Private Investment in Developing Countries / Serven, Luis
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Serven, Luis
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Capital Stock.
- Currencies and Exchange Rates.
- Debt Markets.
- Developing Countries.
- Development Bank.
- Economic Stabilization.
- Economic Theory and Research.
- Emerging Markets.
- Exchange.
- Finance and Financial Sector Development.
- Financial Development.
- Financial Literacy.
- Financial Systems.
- Goods.
- Income Level.
- Inflation.
- Investment and Investment Climate.
- Investment Decisions.
- Macroeconomic Management.
- Macroeconomic Uncertainty.
- Macroeconomic Variables.
- Macroeconomics and Economic Growth.
- Non Bank Financial Institutions.
- Poverty Reduction.
- Price Uncertainty.
- Private Investment.
- Private Investors.
- Private Sector Development.
- Pro-Poor Growth.
- Real Exchange Rate.
- Real Exchange Rates.
- Returns.
- Revenue.
- Risk Aversion.
- Local Subjects:
- Capital Stock.
- Currencies and Exchange Rates.
- Debt Markets.
- Developing Countries.
- Development Bank.
- Economic Stabilization.
- Economic Theory and Research.
- Emerging Markets.
- Exchange.
- Finance and Financial Sector Development.
- Financial Development.
- Financial Literacy.
- Financial Systems.
- Goods.
- Income Level.
- Inflation.
- Investment and Investment Climate.
- Investment Decisions.
- Macroeconomic Management.
- Macroeconomic Uncertainty.
- Macroeconomic Variables.
- Macroeconomics and Economic Growth.
- Non Bank Financial Institutions.
- Poverty Reduction.
- Price Uncertainty.
- Private Investment.
- Private Investors.
- Private Sector Development.
- Pro-Poor Growth.
- Real Exchange Rate.
- Real Exchange Rates.
- Returns.
- Revenue.
- Risk Aversion.
- Physical Description:
- 1 online resource (24 pages)
- Place of Publication:
- Washington, D.C., The World Bank, 2002
- System Details:
- data file
- Summary:
- Serven examines empirically the link between real exchange rate uncertainty and private investment in developing countries using a large cross country-time series data set. He builds a GARCH-based measure of real exchange rate volatility and finds that it has a strong negative impact on investment, after controlling for other standard investment determinants and taking into account their potential endogeneity. The impact of uncertainty is not uniform, however. There is some evidence of threshold effects, so that uncertainty only matters when it exceeds some critical level. In addition, the negative impact of real exchange rate uncertainty on investment is significantly larger in economies that are highly open and in those with less developed financial systems. This paper-a product of the Office of the Chief Economist, Latin America and the Caribbean Region-is part of a larger effort in the region to assess the effects of macroeconomic volatility. The author may be contacted at lserven@worldbank.org.
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