Foreign capital and exchange rate movement in developing economies: a theoretical note

This study attempts to provide with underlying theoretical explanations for exchange rate appreciation due to foreign capital inflow. We use an extended three sector specific factor model to explain why and how an inflow of foreign capital boosts the price of a nontradable good that helps tilting the exchange in rate in favor of the host country. We also strive to look at the possible consequences on factor prices and on sectoral de-composition of a representative economy.

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Year of publication:	2013-12
Authors:	Biswas, Anindya ; Mandal, Biswajit ; Saha, Nitesh
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München
Subject:	Foreign capital inflow \| Real exchange rate \| Developing economies

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Extent:	application/pdf
Series:	MPRA Paper.
Type of publication:	Book / Working Paper
Classification:	F21 - International Investment; Long-Term Capital Movements ; F3 - International Finance ; F31 - Foreign Exchange
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011112954