Is there a euro effect in the drivers of US FDI? New evidence using Bayesian Model Averaging techniques

Mariam Camarero, Sergi Moliner () and Cecilio Tamarit
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Sergi Moliner: INTECO & Department of Economics, Universitat Jaume I, Castellón, Spain

No 2020/25, Working Papers from Economics Department, Universitat Jaume I, Castellón (Spain)

Abstract: In this paper we analyze the potential determinants of US outward FDI stock with a particular focus on the euro effect during the period 1985-2016. To this aim, we consider a large set of candidate variables based on the theory as well as on previous empirical analysis. We select the covariates using a data-driven methodology, the Bayesian Model Averaging (BMA) analysis. Our sample includes a total of 51 host countries, that represents the 70% of US outward FDI stock. We study the role of the euro on American FDI patterns both in Europe and the rest of the world. Within Europe, we consider the European Union (EU) and the Euro Area (EA), and core and periphery within the EA. Although we conclude that US FDI is explained by both horizontal and vertical motives, we find that HFDI strategies predominate in EA core countries, whereas VFDI prevails in the EA periphery.

Keywords: FDI determinants; Foreign Direct Investment; US; European Union; Euro area; Bayesian Model Averaging; Variable selection (search for similar items in EconPapers)
JEL-codes: C11 C52 F21 F23 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2020
New Economics Papers: this item is included in nep-eec and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Is there a euro effect in the drivers of US FDI? New evidence using Bayesian model averaging techniques (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:jau:wpaper:2020/25

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