Foreign_Direct_Investment_and_Exchange_R.pdf - MAGKS Aachen Gttingen Kassel Joint Discussion Paper Series in Economics by the Universities of Siegen

Foreign_Direct_Investment_and_Exchange_R.pdf - MAGKS Aachen...

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Joint Discussion Paper Series in Economics by the Universities of Aachen · Gießen · Göttingen Kassel · Marburg · Siegen ISSN 1867-3678 No. 15-2010 Matthias Busse, Carsten Hefeker, and Signe Nelgen Foreign Direct Investment and Exchange Rate Regimes This paper can be downloaded from Coordination: Bernd Hayo • Philipps-University Marburg Faculty of Business Administration and Economics • Universitätsstraße 24, D-35032 Marburg Tel: +49-6421-2823091, Fax: +49-6421-2823088, e-mail: [email protected] Gießen Marburg Kassel Siegen Aachen Göttingen MAGKS
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1 Foreign Direct Investment and Exchange Rate Regimes Matthias Busse Ruhr University of Bochum and HWWI Carsten Hefeker University of Siegen, HWWI and CESifo Signe Nelgen University of Adelaide April 2010 Abstract The paper uses a comprehensive data set with bilateral direct investment flows and establishes the influence of the de-facto exchange rate regime for FDI flows. We find a strong and significant effect from fixed rates on bilateral FDI flows in developed economies, but no significant effect for developing countries. There is thus no general and uniform impact of stable exchange rates on FDI. We provide several possible explanations for this difference. Keywords: Foreign Direct Investment, Multinational Enterprises, Exchanges Rate Regimes JEL-Classification: F21, F23, O24
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