@ARTICLE{Ebrahimi, author = {Ebrahimi, Sajad and }, title = {The Effect of Capital Inflow on Real Exchange Rate in Developing Countries}, volume = {3}, number = {7}, abstract ={  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. }, URL = {http://jemr.khu.ac.ir/article-1-188-en.html}, eprint = {http://jemr.khu.ac.ir/article-1-188-en.pdf}, journal = {Journal of Economic Modeling Research}, doi = {}, year = {2012} }