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1998•International Economic JournalRequires access

THE EFFECTS OF INFLATION AND EXCHANGE RATE POLICIES ON DIRECT INVESTMENT TO DEVELOPING COUNTRIES

Young Seok Ahn, Slamet Seno Adji, Thomas D. Willett

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Abstract

This study focuses on the effects of inflation and exchange rate policy on direct investment flows to developing countries. We find that inflation does have a substantial negative effect on capital inflows. Our estimates indicate that this effect can be significantly reduced, but not eliminated, by following exchange rate policies which avoid substantial overvaluation of the currency. [F 30]

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What this paper is about

This study focuses on the effects of inflation and exchange rate policy on direct investment flows to developing countries. We find that inflation does have a substantial negative effect on capital inflows. Our estimates indicate that this effect can be significantly reduced, but not eliminated, by following exchange rate policies which avoid substantial overvaluation of the currency. [F 30]

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OpenAlex reports 5 citations for this work. Citation counts describe recorded attention and do not establish research quality.

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Available abstract

This study focuses on the effects of inflation and exchange rate policy on direct investment flows to developing countries. We find that inflation does have a substantial negative effect on capital inflows. Our estimates indicate that this effect can be significantly reduced, but not eliminated, by following exchange rate policies which avoid substantial overvaluation of the currency. [F 30]

Key concepts: Economics, Exchange rate, Monetary economics, Inflation (cosmology), Developing country, Capital flows, Currency, Exchange-rate regime

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