6533b86efe1ef96bd12cc7a7
RESEARCH PRODUCT
The effect of the great recession on foreign direct investment: global empirical evidence with a gravity approach
Salvador Gil-parejaJordi PaniaguaRafael-llorca Viverosubject
MacroeconomicsEconomics and EconometricsGravity (chemistry)Demand shockEconomicsSample (statistics)Gravity equationForeign direct investmentEmpirical evidenceGlobal recessionGreat recessiondescription
This article estimates the effect of the present global systemic banking crisis on foreign direct investment (FDI) using the gravity equation on a sample of 161 countries over the period 2003 to 2010. Systemic banking crises, through demand shocks and credit constraints, may impact FDI in two ways: aggregate monetary flows and individual projects count. Since gravity equations account for output variations, our research relies on the financial constraints channel. We find that the great recession, through credit constraints on home supply markets, has reduced the number of FDI projects, but not their size, forcing investors to become more selective on their international endeavours.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2013-09-01 | Applied Economics Letters |