Foreign direct investment and output growth volatility: A worldwide analysis

Bruno Ćorić and Geoff Pugh

International Review of Economics & Finance, 2013, vol. 25, issue C, 260-271

Abstract: The decades preceding the recent financial crisis and global downturn were a period of unusually mild output volatility for many developed and developing market economies. We analyse data from 85 countries and report findings consistent with the hypothesis that foreign direct investment had a stabilising effect on output during the era of the “Great Moderation”. These findings are consistent with, but not a direct test of, the theory that relates the waning of output volatility during these decades to the international diversification of net worth and a corresponding reduction in the strength of the Financial Accelerator.

Keywords: Foreign direct investment; GDP growth volatility; The Great Moderation (search for similar items in EconPapers)
JEL-codes: E32 F41 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:25:y:2013:i:c:p:260-271

DOI: 10.1016/j.iref.2012.07.011

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