%0 Journal Article %A Ebrahimi, Sajad %T The Effect of Capital Inflow on Real Exchange Rate in Developing Countries %J Journal of Economic Modeling Research %V 3 %N 7 %U http://jemr.khu.ac.ir/article-1-188-en.html %R %D 2012 %K Capital inflow, Real Exchange Rate, Dutch disease, dynamic and heterogeneous panel., %X   This study examines the theoretical and empirical aspects of the effect of capital inflow on exchange rate in 14 developing countries for the period 1980-2009. We developed an empirical model to investigate the effects of term of trade, real per capita output and trade openness on real exchange rate using d ynamic and heterogeneous panel and Pool Mean Group (PMG) methods. Estimation results show that various capital inflow channels have different effect on real exchange rate. For non-oil countries, only foreign aid inflow causes exchange rate appreciation in long-run and short-run and creates Dutch disease. In oil exporting countries, oil revenues and foreign direct investment cause exchange rate appreciation and create Dutch disease problems in the long-run. However, an increase in oil revenues in oil exporting countries causes more exchange rate appreciation than an increase in foreign direct investment. %> http://jemr.khu.ac.ir/article-1-188-en.pdf %P 153-173 %& 153 %! %9 Applicable %L A-10-294-2 %+ University of Tehran %G eng %@ 2228-6454 %[ 2012