Foreign Direct Investment Outflows in Business-Cycle Fluctuations
33 Pages Posted: 1 May 2003
Date Written: May 9, 2005
Abstract
This paper investigates business-cycle affects for a country's FDI outflows. OLS and panel regressions show that volatility in economic growth has a negative and significant impact on FDI outflows. Furthermore, we find different types of shocks have asymmetric impacts on FDI outflows. In other words, fluctuations of the same magnitude in a boom and a recession have different effects on FDI outflows. This relationship is more evident in OECD countries. We also include exchange rate volatility, lagged business-cycle measure, and control for potential endogeneity problem as robustness checks. Our findings are robust across different specifications.
Keywords: Foreign Direct Investments, FDI, Business Cycles, Volatility, Determinants, Economic Growth
JEL Classification: E32, F21, F23
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Exchange Rate Volatility and First-Time Entry by Multinational Firms
-
Exchange Rate Volatility and First-Time Entry by Multinational Firms
-
The Proximity-Concentration Tradeoff Under Uncertainty
By Natalia Ramondo, Kim Ruhl, ...
-
Country Risks and the Investment Activity of U.S. Multinationals in Developing Countries
-
Nominal and Real Volatility as Determinants of FDI
By Lilia Cavallari and Stefano D'addona
-
Exchange Rate Volatility in a Simple Model of Firm Entry and FDI
By Thomas Lubik and Katheryn Russ
-
Business Cycle Determinants of US Foreign Direct Investments
By Lilia Cavallari and Stefano D'addona