Exchange Rate Uncertainty and Direct Foreign Investment
Author | : Françoise B. Nicolas |
Publisher | : |
Total Pages | : 225 |
Release | : 1991 |
Genre | : |
ISBN | : |
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Author | : Françoise B. Nicolas |
Publisher | : |
Total Pages | : 225 |
Release | : 1991 |
Genre | : |
ISBN | : |
Author | : William B. Z. Vuokson |
Publisher | : |
Total Pages | : |
Release | : 1990 |
Genre | : |
ISBN | : |
Author | : David Nickerson |
Publisher | : |
Total Pages | : 28 |
Release | : 1991 |
Genre | : Foreign exchange rates |
ISBN | : |
Author | : Isabel Ruiz |
Publisher | : |
Total Pages | : |
Release | : 2009 |
Genre | : |
ISBN | : |
This paper analyzes the impact of exchange rate levels and exchange rate uncertainty on U.S. foreign direct investment into Latin America. By decomposing exchange rate uncertainty into temporary (short-run) and permanent (long-run) components, we further explore whether the nature of uncertainty matters. Our empirical findings support the view that exchange rate uncertainty has a negative impact on U.S. investment flows into Latin America. Moreover, it is the persistency in uncertainty rather than transitory uncertainty that mostly deters foreign investment. In contrast, investors do not appear to be affected by discrete movements in exchange rate levels.
Author | : United States. Congress. House. Committee on Banking, Currency and Housing. Subcommittee on International Trade, Investment and Monetary Policy |
Publisher | : |
Total Pages | : 132 |
Release | : 1977 |
Genre | : International business enterprises |
ISBN | : |
Author | : Hongmo Sung |
Publisher | : |
Total Pages | : 186 |
Release | : 1996 |
Genre | : |
ISBN | : |
Author | : Hongmo Sung |
Publisher | : |
Total Pages | : 0 |
Release | : 2001 |
Genre | : |
ISBN | : |
We investigate how exchange-rate uncertainty affects the foreign direct investment decision of a risk-neutral multinational firm (MNF). We assume the firm can open plants, each with decreasing average costs, in two different countries. Under certainty, the MNF would open only one plant. We demonstrate that with sufficient exchange-rate volatility, the firm can increase expected profits by opening several plants. We also show that if the MNF faces a competitor in the foreign market, the exchange risk, by inducing the MNF to open plants in both markets, may prevent entry by the local competitor.
Author | : Alice Asadurian |
Publisher | : |
Total Pages | : 874 |
Release | : 2003 |
Genre | : |
ISBN | : |
Author | : Joshua Aizenman |
Publisher | : |
Total Pages | : 46 |
Release | : 1992 |
Genre | : Foreign exchange |
ISBN | : |
The goal of this paper is to investigate the factors determining the impact of exchange rate regimes on the behavior of domestic investment and foreign direct investment (FDI), and the correlation between exchange rate volatility and investment. We assume that producers may diversify internationally in order to increase the flexibility of production: being a multinational enables producers to reallocate employment and production towards the more efficient or the cheaper plant. We characterize the possible equilibria in a macro model that allows for the presence of a short-run Phillips curve, under a fixed and a flexible exchange rate regime. It is shown that a fixed exchange rate regime is more conducive to FDI relative to a flexible exchange rate, and this conclusion applies for both real and nominal shocks. The correlation between investment and exchange rate volatility under a flexible exchange rate is shown to depend on the nature of the shocks. If the dominant shocks are nominal, we will observe a negative correlation, whereas if the dominant shocks are real, we will observe a positive correlation between exchange rate volatility and the level of investment.
Author | : Bettina Becker |
Publisher | : |
Total Pages | : 20 |
Release | : 2003 |
Genre | : Economics |
ISBN | : |