Quotation Huber, Florian, Fischer, Manfred M., Piribauer, Philipp. 2019. The role of US-based FDI flows for global output dynamics. Macroeconomic Dynamics. 23 (3), 943-973.


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Abstract

This paper uses a global vector autoregressive (GVAR) model to analyze the relationship between FDI inflows and output dynamics in a multi-country context. The GVAR model enables us to make two important contributions: First, to model international linkages among a large number of countries, which is a key asset given the diversity of countries involved, and second, to model foreign direct investment and output dynamics jointly. The country-specific small-dimensional vector autoregressive submodels are estimated utilizing a Bayesian version of the model coupled with stochastic search variable selection priors to account for model uncertainty. Using a sample of 15 emerging and advanced economies over the period 1998:Q1 to 2012:Q4, we find that US outbound FDI exerts a positive long-term effect on output. Asian and Latin American economies tend to react faster and also stronger than Western European countries. Forecast error variance decompositions indicate that FDI plays a prominent role in explaining GDP fluctuations, especially in emerging market economies. Our findings provide evidence for policy makers to design macroeconomic policies to attract FDI inflows in the respective countries.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Macroeconomic Dynamics
Citation Index SSCI
WU-Journal-Rating new FIN-A, VW-C
Language English
Title The role of US-based FDI flows for global output dynamics
Volume 23
Number 3
Year 2019
Page from 943
Page to 973
Reviewed? Y
DOI http://dx.doi.org/10.1017/S1365100517000086
Open Access N

Associations

People
Huber, Florian (Details)
Fischer, Manfred M. (Details)
External
Piribauer, Philipp (Wirtschaftsforschungsinstitut, Austria)
Organization
Institute for Macroeconomics IN (Details)
Institute for Economic Geography and GIScience IN (Details)
Research areas (Ă–STAT Classification 'Statistik Austria')
1145 Time series analysis (Details)
5300 Economics (Details)
5323 Econometrics (Details)
5371 Macroeconomics (Details)
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