The Real Exchange Rate and Foreign Direct Investment in the United States

The Real Exchange Rate and Foreign Direct Investment in the United States
Author: Michael W. Klein
Publisher:
Total Pages: 42
Release: 1992
Genre: Foreign exchange rates
ISBN:

Download The Real Exchange Rate and Foreign Direct Investment in the United States Book in PDF, Epub and Kindle

There has been a significant correlation between United States inward foreign direct investment and the United States real exchange rate since the 1970s. Two alternative reasons for this relationship are that the real exchange rate affects the relative cost of labor and that the real exchange rate alters relative wealth across countries. In this paper we explore these alternatives by examining the determinants of four measures of inward foreign direct investment to the United States from seven industrial countries over the period 1979 to 1991. We find strong evidence that relative wealth significantly affects U.S. inward foreign direct investment. We find no evidence that relative wages have a significant impact on the determination of U.S. foreign direct investment. These results are robust to the choice of countries in our sample and when controlling for changes in tax codes.

Foreign Direct Investment, Trade and Real Exchange Rate Linkages in Developing Countries

Foreign Direct Investment, Trade and Real Exchange Rate Linkages in Developing Countries
Author: Linda S. Goldberg
Publisher:
Total Pages: 0
Release: 1997
Genre:
ISBN:

Download Foreign Direct Investment, Trade and Real Exchange Rate Linkages in Developing Countries Book in PDF, Epub and Kindle

We investigate the relationships among trade, foreign direct investment and the real exchange rate between a set of Southeast Asian and Latin American countries and both the United States and Japan. Foreign direct investment by both Japan and the United States to the Southeast Asian countries in our sample is significantly affected by bilateral real exchange rates. Also, trade between the countries in our sample and the United States and Japan is significantly affected by foreign direct investment. These sets of relationships, between the real exchange rate and foreign direct investment, and between foreign direct investment and trade, support two channels through which the real exchange rate affects trade: a direct effect on the relative price of goods and an indirect effect through foreign direct investment.

Foreign Direct Investment, Trade and Real Exchange Rate Linkages in Southeast Asia and Latin America

Foreign Direct Investment, Trade and Real Exchange Rate Linkages in Southeast Asia and Latin America
Author: Linda S. Goldberg
Publisher:
Total Pages: 58
Release: 1997
Genre: Foreign exchange rates
ISBN:

Download Foreign Direct Investment, Trade and Real Exchange Rate Linkages in Southeast Asia and Latin America Book in PDF, Epub and Kindle

We investigate the relationships among trade, foreign direct investment and the real exchange rate between a set of Southeast Asian and Latin American countries and both the United States and Japan. Foreign direct investment by both Japan and the United States to the Southeast Asian countries in our sample is significantly affected by bilateral real exchange rates. Also, trade between the countries in our sample and the United States and Japan is significantly affected by foreign direct investment. These sets of relationships, between the real exchange rate and foreign direct investment, and between foreign direct investment and trade, support two channels through which the real exchange rate affects trade: a direct effect on the relative price of goods and an indirect effect through foreign direct investment.

Capital Flows, Exchange Rate Flexibility, and the Real Exchange Rate

Capital Flows, Exchange Rate Flexibility, and the Real Exchange Rate
Author: Mr.Tidiane Kinda
Publisher: International Monetary Fund
Total Pages: 35
Release: 2011-01-01
Genre: Business & Economics
ISBN: 1455211877

Download Capital Flows, Exchange Rate Flexibility, and the Real Exchange Rate Book in PDF, Epub and Kindle

This paper analyzes the impact of capital inflows and exchange rate flexibility on the real exchange rate in developing countries based on panel cointegration techniques. The results show that public and private flows are associated with a real exchange rate appreciation. Among private flows, portfolio investment has the highest appreciation effect-almost seven times that of foreign direct investment or bank loans-and private transfers have the lowest effect. Using a de facto measure of exchange rate flexibility, we find that a more flexible exchange rate helps to dampen appreciation of the real exchange rate stemming from capital inflows.

Trade and Investment Performance Under Floating Exchange Rates

Trade and Investment Performance Under Floating Exchange Rates
Author: International Monetary Fund
Publisher: International Monetary Fund
Total Pages: 24
Release: 1988-05-03
Genre: Business & Economics
ISBN: 1451977700

Download Trade and Investment Performance Under Floating Exchange Rates Book in PDF, Epub and Kindle

Contrary to the arguments of several scholars, we have failed to find either a conclusive theoretical case or clear empirical evidence of an effect, harmful or otherwise, of exchange rate variability (as measured by either short-term volatility or long-run misalignment) on overall levels of international trade. In this paper, after reviewing the theories and evidence on this issue, we go on to consider the impact of exchange rate variability on direct foreign investment. We summarize and amplify upon the scant theoretical literature of this issue, and proceed to test U.S. data for the presence of such an impact. We find none.