Exchange Rate Strategies in the Competition for Attracting FDI

Working Paper No. 1999-16

Posted: 18 May 2000

See all articles by Agnès Bénassy-Quéré

Agnès Bénassy-Quéré

Paris School of Economics (University Paris 1)

Lionel Gérard Fontagné

Banque de France; CEPII; University of Paris 1 Panthéon Sorbonne; Paris School of Economics

Amina Lahreche-Revil

CEPII, Centre d'Etudes Prospectives et d'Info. Internationales, Paris; University of Amiens; Université Paris I Panthéon-Sorbonne - TEAM

Date Written: 1999

Abstract

The choice of an exchange-rate regime is considered by integrating the determinants of multinational firms locations. We consider the case of a risk-adverse multinational firm which contemplates relocating two alternative foreign locations in order to re-export. We explicit the trade-off between price competitiveness and a stable nominal exchange rate. We also show that the firm will consider both locations as substitutes or as complements depending on whether the two exchange rates against the investing country's currency are positively or negatively correlated.

JEL Classification: F21, F23, F31, F33

Suggested Citation

Benassy-Quere, Agnes and Fontagne, Lionel and Lahreche-Revil, Amina and Lahreche-Revil, Amina, Exchange Rate Strategies in the Competition for Attracting FDI (1999). Working Paper No. 1999-16, Available at SSRN: https://ssrn.com/abstract=217070

Agnes Benassy-Quere (Contact Author)

Paris School of Economics (University Paris 1) ( email )

106-112 boulevard de l'Hopital
Paris, F-75013
France
+33 1 44 07 82 19 (Phone)

HOME PAGE: http://www.parisschoolofeconomics.com/benassy-quere-agnes/agnesb.html

Lionel Fontagne

Banque de France ( email )

Paris
France

HOME PAGE: http://www.lionel-fontagne.eu/

CEPII ( email )

9 Rue Georges Pitard
Paris, 75015
France
+33 1 53 68 55 06 (Phone)

HOME PAGE: http://lionelfontagne.weebly.com/

University of Paris 1 Panthéon Sorbonne ( email )

Maison des Sciences Economiques
106-112 Bd de l'Hôpital
Paris, 75013
France
+33 1 44 07 89 94 (Phone)
+33 1 53 68 55 01 (Fax)

HOME PAGE: http://lionelfontagne.weebly.com/

Paris School of Economics ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France
+33 1 44 07 89 94 (Phone)

HOME PAGE: http://lionelfontagne.weebly.com/

Amina Lahreche-Revil

CEPII, Centre d'Etudes Prospectives et d'Info. Internationales, Paris ( email )

9 Rue Georges Pitard
Paris Cedex 15, F-75015
France
+33 1 53 68 55 61 (Phone)
+33 1 53 68 55 03 (Fax)

University of Amiens

Chemin du Thil
80025 Amiens Cedex 1
France

Université Paris I Panthéon-Sorbonne - TEAM

106-112 boulevard de l'hôpital
Cedex 13 Paris, P75647
France

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