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

Daud, Ariff and Masih, Mansur (2017): Is there any relationship between exchange rate and investment ? evidence from Australia.

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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.

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