Exchange Rate Volatility and Inward Foreign Direct Investment in Greece: The Prospect of Emu Membership
International Review of Economics and Business (RISEC), Vol 49, No. 4, 2002
Posted: 26 Jun 2008
Date Written: June 25, 2008
The goal of this paper is to examine the impact of exchnage rate uncertainty on foreign direct investment (FDI) flows from European Union (EU) countries (the source countries) into Greece (the host country). Measuring exchange rate uncertainty through the ARCH methodology, the empirical results show that exchange rate uncertainty exerts a negative impact on FDI inflows from EU countries, implying the negative profit exposure of FDI investors as well as the absence of sophisticated capital markets in Greece.
Keywords: FDI, EMU, exchange rate volatility
JEL Classification: F21, F23, F31
Suggested Citation: Suggested Citation