IDEAS home Printed from
   My bibliography  Save this paper



  • Peter R. Crabb

    (Northwest Nazarene University)


The real value of the U.S. dollar and the level of U.S. foreign direct investment (FDI) have shown a strong correlation since the 1970s. Previous empirical studies on this relationship use primarily national or industry level data. This study uses firm-level data to test the hypothesis that exchange rates affect investment decisions of corporations by affecting the foreign currency value of their internal wealth. Implications from this model of firm behavior are tested using firm-level and geographically detailed data from U.S. national and multinational corporations. The results are inconsistent with the wealth effect explanation of FDI.

Suggested Citation

  • Peter R. Crabb, 2003. "EXCHANGE RATES AND INVESTMENT BY MULTINATIONAL CORPORATIONS: A Firm-Level Test of the Imperfect Capital Markets Result," International Trade 0307001, EconWPA.
  • Handle: RePEc:wpa:wuwpit:0307001
    Note: Type of Document - Word; prepared on IBM; to print on HP;

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Star, Spencer, 1974. "Accounting for the Growth of Output," American Economic Review, American Economic Association, vol. 64(1), pages 123-135, March.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Multinational Firms; Foreign Exchange;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpit:0307001. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.