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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