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Foreign Direct Investment and Exchange Rate Regimes

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Author Info

  • Matthias Busse

    (Ruhr University of Bochum and HWWI)

  • Carsten Hefeker

    (University of Siegen, HWWI and CESifo)

  • Signe Nelgen

    (University of Adelaide)

Abstract

The paper uses a comprehensive data set with bilateral direct investment flows and establishes the influence of the de-facto exchange rate regime for FDI flows. We find a strong and significant effect from fixed rates on bilateral FDI flows in developed economies, but no significant effect for developing countries. There is thus no general and uniform impact of stable exchange rates on FDI. We provide several possible explanations for this difference.

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File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/15-2010_busse.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 201015.

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Length: 29 pages
Date of creation: 2010
Date of revision:
Publication status: Forthcoming in
Handle: RePEc:mar:magkse:201015

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Keywords: Foreign Direct Investment; Multinational Enterprises; Exchanges Rate Regimes;

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References

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Cited by:
  1. Axel Dreher & Peter Nunnenkamp & Krishna Chaitanya Vadlamannati, 2011. "The Role of Country-of-origin Characteristics for Foreign Direct Investment and Technical Cooperation in Post-reform India," KOF Working papers 11-283, KOF Swiss Economic Institute, ETH Zurich.

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