Is inflation targeting or the fixed exchange rate more effective for attracting FDI into developing countries?

Dessie Ambaw () and Nicholas Sim ()

Applied Economics Letters, 2018, vol. 25, issue 7, 499-503

Abstract: This article investigates which monetary policy regime – inflation targeting or the fixed exchange rate – is more effective for attracting FDI inflows into developing countries. Using propensity score matching and the difference-in-differences estimator, we find no evidence that adopting an inflation targeting regime would be more effective than adopting a fixed exchange rate, and vice versa, in encouraging FDI inflows.

Date: 2018
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DOI: 10.1080/13504851.2017.1340563

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