Firm-Specific Assets and the Link between Exchange Rates and Japanese Foreign Direct Investment in the United States: A Re-Examination

13 Pages Posted: 14 May 2003

See all articles by Jie Qun Guo

Jie Qun Guo

Interactive Data Pricing and Reference Data, Inc.

Pravin K. Trivedi

Indiana University Purdue University Indianapolis (IUPUI) - Department of Economics

Abstract

Blonigen has studied Japanese foreign direct investment (FDI) in the USA using panel count models and data for 1975-92. He reports that appreciation of Japanese yen had a positive impact on Japanese FDI in the USA. We re-examine the robustness of this conclusion using Blonigen's data and a family of econometric models - finite mixture panel count models - that are more flexible and appear to provide an improved fit to his data. Although our results broadly support Blonigen's conclusions regarding the link between the exchange rate and Japanese FDI in the USA, our approach highlights the considerable diversity in the response of FDI to exchange rate variations.

JEL Classification: C25

Suggested Citation

Guo, Jie Qun and Trivedi, Pravin K., Firm-Specific Assets and the Link between Exchange Rates and Japanese Foreign Direct Investment in the United States: A Re-Examination. Japanese Economic Review, Vol. 53, pp. 337-349, 2002. Available at SSRN: https://ssrn.com/abstract=324716

Jie Qun Guo (Contact Author)

Interactive Data Pricing and Reference Data, Inc. ( email )

New York, NY 10007
United States

Pravin K. Trivedi

Indiana University Purdue University Indianapolis (IUPUI) - Department of Economics ( email )

Wylie Hall
Bloomington, IN 47405-2100
United States

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