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Essays On Foreign Direct Investment And Exchange Rate
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Book Synopsis Essays on Foreign Direct Investment and Exchange Rate by :
Download or read book Essays on Foreign Direct Investment and Exchange Rate written by and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: It has long been observed that the change in exchange rate of a country is positively correlated with Foreign Direct Investment (FDI) inflow into its border. This thesis provides an explanation of this positive correlation, examines the implied welfare effects of short run FDI flows, and offers policy suggestions. We examine firms' cross-border production location decisions in an open-economy macroeconomic model, in which both the exchange rate and FDI flow are endogenously determined. It is argued that the change in the relative real wage caused by nominal rigidities in wage-setting is the underlying cause of the observed correlation. Furthermore, it is shown that these short run fluctuations in FDI speed up the convergence of the economy back to its long run equilibrium, but further exacerbate the inefficiencies in aggregate employments in both countries. Welfare analysis shows that when monetary volatility is sufficiently high, prohibiting FDI increases world utility. Yet the first best outcome can be achieved if long term FDI is retained, but short run variations in production location is disallowed. The theory predicts that industries characterized by wider practice of unionization and collective wage bargaining, and industries with higher labor intensities of production, should exhibit higher level of exchange rate-FDI correlations. Given that short run firm relocation is shown to magnify business cycle fluctuations, we then analyze how monetary policy can be designed to mitigate the above-mentioned inefficiency. Specifically, we examine the effects of output gap response in a Taylor-type interest rate rule. Previous literature has emphasized that, when real shocks cause the natural level of output to deviate from steady state, responding to output gap causes distortion. We show that when multinationals exist, output gap response is an effective mechanism to discourage temporary firm relocation. We compute and compare the expected world utility under different environment, and conclude that in every situation, a mild output response always improve welfare.
Book Synopsis Three Essays on Foreign Direct Investment by : Kasaundra Michele Tomlin
Download or read book Three Essays on Foreign Direct Investment written by Kasaundra Michele Tomlin and published by . This book was released on 1998 with total page 210 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on foreign direct investment, capital flows and exchange rates by : Wenjie Chen
Download or read book Essays on foreign direct investment, capital flows and exchange rates written by Wenjie Chen and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on the Relationships Between Foreign Direct Investment, International Trade, and Exchange Rate Volatility by : Bedassa Tadesse Ayele
Download or read book Essays on the Relationships Between Foreign Direct Investment, International Trade, and Exchange Rate Volatility written by Bedassa Tadesse Ayele and published by . This book was released on 2003 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Foreign direct investment (FDI) and international trade play key roles in enhancing global technology transfer, fostering economic growth, and the increasing integration of the global economy. A country's market maturity level and export platform status are particularly important in determining the amount of FDI andtrade that a country receives. This dissertation focuses on the host market characteristics, the FDI-trade interaction, and how exchange rate risk affects a nation's bilateral trade volume. The first essay examines whether FDI is a complement or a substitute to the bilateral trade (export sales) and the extent to which FDI-trade relationship is affected by the host's market characteristics. In addition to examining the same problem at a disaggregated industry level, the second essay examines theallocation of industry-specific manufacturing FDI across different host countries. Both essays, respectively, use country- and industry-specific Japanese bilateral trade and outward FDI (establishment counts and values) into geographically and economically diverse host nations. Results from the aggregate country-level analysis show that Japanese FDI and export sales during 1989-1999 were complementary. However, the results are sensitive to host's maturity level and export platform status. Results from industry-level analysis show that the relationship between Japanese manufacturing FDI and trade is industry specific. For example, while Japanese outward FDI complements industry specific export sales in food, beverage and tobacco industries, in wood products, furniture, and basic metal manufacturing industries, it substitutes export sales. The third essay investigates the effects of real exchange rate volatility due to shocks in both the fundamental and the microstructure component of the exchange rate on the volume of imports. Empirical results based on monthly bilateral trade data between the U.S., Canada, Germany and Hong Kong indicate that volatility in exchange rate due to shocks in the microstructure aspect of the exchange market has a trade depressing impact. The effect of volatility inthe fundamental exchange rate on the volume of trade, on the other hand, is mixed, suggesting the possibility that importers of different commodity groups treat the effect of exchange risk in the fundamental component on their trading activities differently.
Book Synopsis Monetary Policy, Capital Flows and Exchange Rates by : David G. Dickinson
Download or read book Monetary Policy, Capital Flows and Exchange Rates written by David G. Dickinson and published by Psychology Press. This book was released on 2002 with total page 316 pages. Available in PDF, EPUB and Kindle. Book excerpt: Max Fry was known internationally for his research on international and domestic financial issues. This book draws together contributions from a range of academic and policy-making friends and colleagues.
Book Synopsis Essays on Foreign Direct Investment (FDI) and Trade by : Alper Yilmaz
Download or read book Essays on Foreign Direct Investment (FDI) and Trade written by Alper Yilmaz and published by . This book was released on 2001 with total page 226 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays in International Economics by : Maxwell Oteng
Download or read book Three Essays in International Economics written by Maxwell Oteng and published by . This book was released on 2002 with total page 342 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Managing International Risk by : Richard J. Herring
Download or read book Managing International Risk written by Richard J. Herring and published by Cambridge University Press. This book was released on 1983 with total page 290 pages. Available in PDF, EPUB and Kindle. Book excerpt: Issues addressed include the prospects for foreign exchange crises, trade wars, international banking crises, and oil shortages.
Book Synopsis Essays on the Latin American Foreign Exchange Market by : Isabel Ruiz
Download or read book Essays on the Latin American Foreign Exchange Market written by Isabel Ruiz and published by . This book was released on 2006 with total page 170 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays on the Macroeconomic Impact of Foreign Direct Investment in Low and Middle Income Countries by : Md Abdullah
Download or read book Three Essays on the Macroeconomic Impact of Foreign Direct Investment in Low and Middle Income Countries written by Md Abdullah and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation comprises three essays on macroeconomic impacts of foreign direct investment (FDI). The first essay analyses the impact of FDI on the growth rate of total factor productivity of host countries. The essay focuses on 77 low- and middle-income countries and is based on balanced panel data for the period 1980-2008. The system GMM and common correlated effects (CCE) panel data methods are applied to estimate the models. Estimated coefficients show that FDI does not have any significant impact on the growth rate and the levels of TFP. The second essay investigates the relationship between FDI and domestic investment focusing on low- and middle-income countries, and using panel data for the period 1980-2012. It applies common parameter and heterogeneous parameter, static and dynamic, single equation and simultaneous equation panel data econometric techniques to study the relationship. Empirical findings suggest that FDI crowds our domestic investment. Our estimated coefficients also suggest that countries that have weak institutions, less developed financial systems, less human capital, less developed infrastructure, or economies that are more open, are more exposed to foreign competition and experience stronger crowding out from inward FDI. In the third essay, the influence of capital flows on the real exchange rate of recipient countries is analysed. The influence of three important capital flows, viz. foreign direct investment (FDI), foreign aid, and remittances, are assessed on the real exchange rate, using data for 45 middle- and low-income countries for the period 1980-2013. Both heterogeneous and homogeneous panel data methods are applied to estimate the real exchange rate models. The estimated coefficients of these models imply that foreign direct investment (FDI) and remittances do not influence the real exchange rate. Aid tends to depreciate the real exchange rate. Findings also suggest that financial development does not influence the exchange rate impact of aid in our sample countries. The study further finds that while aid tends to increase real exchange rate volatility, FDI and remittances do not have any robust influence on volatility.
Download or read book Emerging Asia written by R. Rajan and published by Springer. This book was released on 2011-04-28 with total page 183 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book on the different aspects of international economic policy covers financial crises, reserve accumulation, capital flows and currency wars as well as issues relating to foreign direct investment and developments in China and India.
Book Synopsis Three Essays on the Impacts of Risk and Uncertainty on Foreign Direct Investment (FDI) and Remittances Flows Into Developing Countries by : Blen Solomon
Download or read book Three Essays on the Impacts of Risk and Uncertainty on Foreign Direct Investment (FDI) and Remittances Flows Into Developing Countries written by Blen Solomon and published by . This book was released on 2007 with total page 224 pages. Available in PDF, EPUB and Kindle. Book excerpt: This three-essay dissertation focuses on the two most important and most stable sources of finance to developing countries, namely Foreign Direct Investment (FDI) and remittances. The first essay examines the roles of exchange rate uncertainty and political risk in determining FDI inflows into African economies. The past few decades have witnessed a surge of FDI inflows to developing regions. However, FDI inflows to Africa still remain relatively small and investor surveys show political risk and macroeconomic uncertainty to be strong deterrents of FDI inflows into Africa. In this essay, I use a sample of 12 African countries and employ Fixed Effect and Arellano-Bond GMM estimators to investigate the impact of exchange rate uncertainty and political risk on FDI inflows into African economies. The results confirm the predictions of the theoretical model presented, showing both macroeconomic uncertainty and political risk to be deterrents of FDI inflows into these African economies. The second essay is concerned with the unbalanced FDI inflow patterns across developing regions.1 In addition to the traditional determinants of FDI, such as infrastructure development, market size, and labor force availability, the question of whether political risk and exchange rate uncertainty play a role in determining these patterns is addressed. This essay employs data on FDI inflows into Africa, Asia, and Latin America to conduct a cross-region comparison on the impacts of risk and uncertainty on FDI inflows. Parametric as well as semiparametric results show that risk affects FDI into Africa more severely than other developing regions. In addition, it is shown that even after controlling important FDI determinants, African countries receive less FDI compared to other developing countries. The third essay focuses on remittances which are becoming an increasingly important and highly stable source of external finance for many developing countries. The stable and counter-cyclical nature of remittances exerts a stabilizing influence and helps insulate vulnerable developing countries from economic shocks. Hence, the third essay analyzes the effects of uncertainty and risk in affecting remittances inflows into these economies. This essay mainly focuses on Latin America since it is now the main remittance recipient region in the world.
Book Synopsis Three Essays on Financial Constraints and Foreign Direct Investment by : Todd Sarnstrom (II)
Download or read book Three Essays on Financial Constraints and Foreign Direct Investment written by Todd Sarnstrom (II) and published by . This book was released on 2016 with total page 84 pages. Available in PDF, EPUB and Kindle. Book excerpt: This three-essay dissertation makes contributions to the literature on foreign direct investment (FDI) and its relationship with collateral and the exchange rate. FDI refers to an investment made by a firm to establish or acquire a long-lasting interest in another firm operating outside its home country. Often, FDI involves substantial fixed costs that require the investing firm to seek external financing. Collateral has been identified as an important factor in the external financing of FDI. Firms lacking collateral are constrained in their ability obtain external financing. Exchange rates have also been identified as a factor in FDI. Exchange rate movements may create differences in relative wealth between firms headquartered in different countries. The first essay studies how the value of collateral pledged to externally financed FDI varies with how productive firms are. I develop a theoretical model illustrating that more productive firms are able to pledge a smaller amount of collateral relative to less productive firms. Additionally, firms with a productivity level below a set threshold level need to pledge collateral of greater value than the amount borrowed. Firms facing this situation may opt to instead forego the FDI project. I empirically examine the relationship between pledged collateral and productivity using firm-level data on Japanese FDI into the U.S. between 1980 and 2000. My results support an inverse relationship between productivity and pledged collateral implied by the theoretical model. My results are the strongest for 1991-2000, the period that followed the burst of Japan's asset bubble and subsequent collapse of its banking system, which limited the access Japanese firms had to external financing. The second essay studies the impact a financial shock has on the amount of controlling interest (ownership equity) the investing firm has in the foreign affiliate. In particular, I show how land price shocks in Japan shaped the ownership equity of Japanese foreign affiliates by analyzing impulse response functions for Japanese foreign direct investment into 12 OECD countries from 1975 to 2000. A positive shock to land value increased ownership equity in foreign affiliates belonging to the same 2-digit standard industrial classification as their Japanese parent by approximately 4-8 percentage points. The third essay studies the impact exchange rate movements have on foreign direct investment flows. I use a relatively new empirical technique known as global vector autoregression (GVAR) to model the interactions between the real exchange rate and U.S. outward FDI. My results indicate evidence of a statistical relationship between U.S. FDI outflow and exchange rate movements. However, the actual size of the effect on U.S. FDI outflow is very small; amounting to much less than 1% of overall FDI received by host countries in the study for recent years. I conclude that exchange rates did not have an economically meaningful impact on U.S. FDI outflows during this period.
Book Synopsis Two Essays on International Economics by : Victor Manuel Gastanaga
Download or read book Two Essays on International Economics written by Victor Manuel Gastanaga and published by . This book was released on 2000 with total page 218 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis International Money by : Charles P. Kindlerberger
Download or read book International Money written by Charles P. Kindlerberger and published by Routledge. This book was released on 2013-11-05 with total page 360 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book was first published in 1981. A collection of twenty-two papers, written between 1966 and 1976 on international monetary relations.
Book Synopsis Essays on the Latin American Foreign Exchange Market by : Isabel Ruiz (Ph. D.)
Download or read book Essays on the Latin American Foreign Exchange Market written by Isabel Ruiz (Ph. D.) and published by . This book was released on 2006 with total page 290 pages. Available in PDF, EPUB and Kindle. Book excerpt: During the last decade, Latin American countries have moved towards becoming more open and financially integrated. At the same time, the region has appeared to adopt a "bipolar" position concerning exchange rate regimes. Most countries have moved towards more flexible exchange rates, while others have implemented hard pegs in the form of dollarization. This dissertation has two goals. First, to measure linkages and dynamics across Latin American foreign exchange markets. Second, to explore how exchange rate uncertainty impacts U.S. foreign direct investment (FDI) into Latin America. In order to study interactions among these markets, I focus on the level of the currency and a measure of its volatility. I test for first and second order common features: common stochastic trends and common volatility. Evidence of common features in the foreign exchange markets has substantial implications. From a macroeconomic perspective, they indicate movements toward financial integration. From the point of view of investors, it has implications in terms of the assessment of risk and the development of hedging strategies. The existence of common stochastic trends is analyzed across countries, trade areas, and over different periods of time using Johansen (1991, 1995) and Gregory and Hansen (1996) cointegration tests. The existence of a common volatility process is tested using a factor autoregressive heteroscedastic (ARCH) model and the Engle and Kozicki (1993) methodology. The evidence suggests that most countries' currencies are cointegrated with the Brazilian real. This finding implies that the Brazilian real displays useful information about the long-run path of other currencies in the region. In terms of volatility dynamics, while most currencies display evidence of time-varying variance, the volatility movements in the foreign exchange market seems to be mainly country specific. Finally, I analyze the impact of exchange rate changes and exchange rate uncertainty on U.S. FDI inflows into Latin America. Following Engle and Lee (1999), exchange rate uncertainty is decomposed into a transitory and a permanent component. While controlling for other foreign investment determinants, the results indicate that exchange rate uncertainty appears to be detrimental to FDI inflows.
Book Synopsis Three Essays in International Trade and Investment by : Ting Gao
Download or read book Three Essays in International Trade and Investment written by Ting Gao and published by . This book was released on 1998 with total page 332 pages. Available in PDF, EPUB and Kindle. Book excerpt:
