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Foreign Direct Investment and Exchange Rate Regimes

  • Matthias Busse

    (Ruhr University of Bochum and HWWI)

  • Carsten Hefeker

    (University of Siegen, HWWI and CESifo)

  • Signe Nelgen

    (University of Adelaide)

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
Download Restriction: no

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
Contact details of provider: Postal: Universitätsstraße 25, 35037 Marburg
Phone: 06421/28-1722
Fax: 06421/28-4858
Web page: http://www.uni-marburg.de/fb02/
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