Sectoral R&D intensity and Exchange Rate Volatility: A Panel Study on Economies of the OECD Volume 3 Jena Economic Research Papers 2009-08-06 2009 2007 2009-056 R&D intensity Innovation Real Exchange Rate Volatility Exports OECD-Countries A recent literature has pointed at potential negative effects of exchange rate volatility on innovation. In this paper, we propose that there may be a direct effect as well as an indirect effect via export activity. We test these hypotheses for sectoral R&D intensities using OECD panel data for manufacturing and services sectors for 14 OECD economies and the years 1987 - 2003. We find that the direct negative effect of volatility is pronounced in manufacturing sector but is dominated by the indirect effect via the export channel. Services do not face any effects of volatility on R&D intensities. While it is not clear which channel dominates our results confirm that there is a negative volatility affect related to openness on a sectoral level. jportal_jpjournal_00000016 2009-08-06T06:28:05.460Z 2010-12-17T11:54:04.770Z