Real exchange rate volatility reduces the level of economic growth by creating uncertainty about profits, unemployment and poverty. It restricts the international flow of capital by reducing direct investment in foreign operating facilities including financial portfolio investment. Employing a dynamic setting employing the Dynamic Ordinary Least Squares (DOLS), a level-level specification is used to investigate the marginal effects of real exchange rate volatility on economic growth. The main contribution of this paper is that it adds new empirical evidence and new dimensions to the literature on the impact of real exchange rate volatility on economic growth in developing economies. Secondly
Download