Exchange Rate Variability and Foreign Direct Investment: Consequences of EMU Enlargement

Michał Brzozowski ()

Eastern European Economics, 2006, vol. 44, issue 1, 5-24

Abstract: This paper analyzes theoretically and empirically the likely impact of the reduction in exchange rate uncertainty, due to European Monetary Union accession, on the intensity of foreign direct investment (FDI) inflow into candidate countries. Theoretical models give an ambiguous picture of how exchange rate uncertainty and volatility affect the direction and magnitude of such inflows. This paper finds that exchange rate uncertainty and volatility--and nominal exchange rate uncertainty in particular--may negatively influence the decision to locate investment in transition and accession countries. Euro adoption, on the other hand, is likely to positively influence FDI inflows in accession countries.

Date: 2006
References: Add references at CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
http://mesharpe.metapress.com/link.asp?target=contribution&id=1JA352EGDC1QNCYF (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Exchange Rate Variability and Foreign Direct Investment - Consequences of EMU Enlargement (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:eaeuec:v:44:y:2006:i:1:p:5-24

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MEEE20

Access Statistics for this article

More articles in Eastern European Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().