Goldberg and Kolstad (1995) explain that higher volatility in the exchange rate
lowers the expected profit functions of firms that make investment decisions in the current period in
order to realize profits in future periods. Campa (1993) extends this study to risk neutral firms by
using the approach of future expected profits. He finally summarizes that risk neutral firms tend to
postpone their decision to enter the foreign markets in case of high exchange rate variability. Nucci
and Pozzolo (1999) report that currency depreciation stimulates aggregate investment responses for
Italian manufacturing firms through revenue channel and disincentive investment via cost channel.