01826cas a2200265 a 4500 AALejournalIMF018464 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484354834 1018-5941 BD-DhAAL BD-DhAAL Brito, Steve. Real Exchange Rates, Economic Complexity, and Investment / Steve Brito, Nicolas Magud, Sebastian Sosa. Washington, D.C. : International Monetary Fund, 2018. 1 online resource (21 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We show that the response of firm-level investment to real exchange rate movements varies depending on the production structure of the economy. Firms in advanced economies and in emerging Asia increase investment when the domestic currency weakens, in line with the traditional Mundell-Fleming model. However, in other emerging market and developing economies, as well as some advanced economies with a low degree of structural economic complexity, corporate investment increases when the domestic currency strengthens. This result is consistent with Diaz Alejandro (1963)-in economies where capital goods are mostly imported, a stronger real exchange rate reduces investment costs for domestic firms. Mode of access: Internet Magud, Nicolas. Sosa, Sebastian. IMF Working Papers; Working Paper ; No. 2018/107 Full text available on IMF http://elibrary.imf.org/view/journals/001/2018/107/001.2018.issue-107-en.xml IMF e-Library