Exchange rate uncertainty and FDI inflows: the case of Turkey

Burçak Polat and Cem Payaslıoğlu

Asia-Pacific Journal of Accounting & Economics, 2016, vol. 23, issue 1, 112-129

Abstract: In this paper, using monthly data for the period of 2004--2014, we employ a Markov switching model to examine the impact of the level and volatility of real exchange rate (RER) on foreign direct investment (FDI) inflows to Turkey along with a set of control factors. Our estimation results do not support any effect of volatility or the RER. On the other hand, internal factors such as agglomeration effect, inflation, new incentive measures of 2009, and external factors such as Euro area policy interest rate and risk appetite turn out to be effective in driving FDI into the host country.

Date: 2016
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DOI: 10.1080/16081625.2015.1032312

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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