Asia-Pacific Journal of Business (아태비즈니스연구)

KNU The Institute of Management & Economy Research (강원대학교 경영경제연구소)
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A Study on Dutch Disease: Effect of Financial Flow on Real Exchange Rate

  • Atama, Louis (Department of Agricultural and Resource Economics, Kangwon National University)
  • Received : 2016.11.30
  • Accepted : 2016.12.20
  • Published : 2016.12.30
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Abstract

Using panel data for 29 developed countries, this paper studies the relationship between financial flow and trade markets on Dutch diseases for the period 2000-2010 and applying a fixed effects model. In particular, the study shows that an increase in inflows of foreign direct investment (FDI) leads to an appreciation of the real exchange rate. The result also suggests that an inflow of FDI accompanied by exports or government expenditure from tax revenue leads to real exchange rate appreciation. This paper also argued that stock market with FDI does not cause an appreciation of the real exchange rate.

Keywords

References

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