Real exchange-rate uncertainty and US foreign direct investment: an empirical analysis

Schmidt, Christian W.; Broll, Udo

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@article{ Schmidt2009,
 title = {Real exchange-rate uncertainty and US foreign direct investment: an empirical analysis},
 author = {Schmidt, Christian W. and Broll, Udo},
 journal = {Review of World Economics},
 number = {3},
 pages = {513-530},
 volume = {145},
 year = {2009},
 doi = {https://doi.org/10.1007/s10290-009-0024-3},
 urn = {https://nbn-resolving.org/urn:nbn:de:0168-ssoar-203251},
 abstract = {This paper empirically analyzes the impact of exchange-rate uncertainty, exchange-rate movements, and expectations on foreign direct investment (FDI). Using data on US outward FDI for the period 1984–2004 we examine two competing measures of exchange-rate volatility. While the standard measure yields a discouraging effect on FDI outflows in all industries the alternative risk specification reveals a clear distinction between manufacturing and non-manufacturing industries, with the latter showing a positive correlation with increased exchange risk. A real appreciation of host-country currency was associated with higher FDI flows, while expectations about an appreciation showed a negative result.},
}