The endogeneity of the exchange rate as a determinant of FDI: A model of entry and multinational firms

• 成果类型: Article
• 署名作者: Russ, Katheryn Niles
• 署名单位: University of California System; University of California Davis
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2006.04.004
• 发表日期: 2007
• 页码: 344-372
• 关键词: Exchange rate; volatility; Foreign direct investment; Sunk cost; Heterogeneity

摘要

This paper argues that when the exchange rate and projected sales in the host country are jointly determined by underlying macroeconomic variables, regressions of FDI flows on both exchange rate levels and volatility are subject to bias. The results demonstrate that a multinational firm's response to exchange rate volatility will differ depending on whether the volatility arises from shocks in the firm's native or host country. It is the first study to depart from the representative-firm framework in an analysis of direct investment behavior with money. (C) 2006 Elsevier B.V. All rights reserved.