. The paper hypothesizes that the overshooting phase-observed early in the depreciation episode and driven by the balance … depreciation. Given this, larger real exchange rate overshooting should signal a relatively stronger balance sheet effect … external debt, low reserves, low trade openness), (ii) overshooting-based measures of the balance sheet effect foreshadow post-depreciation …

This paper examines the link between real exchange rate volatility and domestic investment by using panel data … cointegration techniques. We study the empirical connection between real effective exchange rate volatility and investment for 51 … developing countries (23 low-income and 28 middle-income countries). The theoretical relationship between investment and real …