Exchange rate volatility and first-time entry by multinational firms
By: Katheryn Niles Russ.
Contributors: National Bureau of Economic Research.
Series: NBER working paper series -- working paper 13659; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 13659.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "Using a model with upfront sunk costs, heterogeneous firms, and endogenous exchange rates, this paper demonstrates theoretically that volatility in fundamental variables such as the nominal interest rate that drive exchange rate volatility can simultaneously impact the entry behavior of multinational firms through a relative price channel unrelated to exchange rate risk.  It then provides an empirical illustration of the bias this endogeneity can cause when regressing measures of foreign direct investment on exchange rate volatility.  It is the first paper to provide empirical evidence that interest rate volatility may influence the behavior of multinational firms"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 6/5/2008.

Includes bibliographical references.

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