Abstract
References
- Breusch, T., Pagan, A. (1980).“The Lagrange multiplier test and its application to model specifications in econometrics”, Rev. Econ. Stud. 47 (1), 239–253.
- Brunetti, Aymo, Kisunko, Gregory and Weder, Beatrice (1997). Institutions in Transition: Reliability of Rules and Economic Performance in Former Socialist Countries, The World Bank, Policy Research Working Paper Series, No 1809.
- Busse, Matthias and Hefeker, Carsten (2005). Political Risk, Institutions and Foreign Direct Investment, HWWA DiscussionPaper 315.
THE EFFECTS OF POLITICAL RISK AND ECONOMIC POLICY UNCERTAINTY ON FOREIGN DIRECT INVESTMENTS: A PANEL COINTEGRATION ANALYSIS FOR SELECTED EU COUNTRIES
Abstract
Political risk and
economic policy uncertainty have an impact on many macroeconomic variables in
the economy. One of the most crucial of these variables are foreign direct
investment. Foreign investors refrain from investing in the economies of high
policy uncertainty and direct their investment to the economies where there is
political stability and no uncertainty in the economy. This study attempted an
econometric model to illustrate the long-run relationships among political
risk, economic policy uncertainty and foreign direct investment inflows of five
EU countries during the period 2001-2014. Westerlund and Edgerton (2007)'s
panel LM bootstrap panel cointegration test is applied to discover empirical support for the presence of the cointegration
relationship between the variables.
Finally, the cointegration coefficients are estimated by using the
Pesaran (2006)'s CCE estimator. The empirical findings show positive
coefficients for political stability in Germany, France, England and Spain
while statistically significant and negative coefficients for economic policy
uncertainty in France and Spain. In addition, the variable of economic freedom
has statistically significant and positive effect on foreign direct investments
for only England and the openness of trade variable has statistically
significant and positive effect on it for Spain and Italy.
References
- Breusch, T., Pagan, A. (1980).“The Lagrange multiplier test and its application to model specifications in econometrics”, Rev. Econ. Stud. 47 (1), 239–253.
- Brunetti, Aymo, Kisunko, Gregory and Weder, Beatrice (1997). Institutions in Transition: Reliability of Rules and Economic Performance in Former Socialist Countries, The World Bank, Policy Research Working Paper Series, No 1809.
- Busse, Matthias and Hefeker, Carsten (2005). Political Risk, Institutions and Foreign Direct Investment, HWWA DiscussionPaper 315.
Details
| Primary Language | Turkish |
|---|---|
| Journal Section | Girişimcilik ve Kalkınma Dergisi |
| Authors | |
| Publication Date | July 4, 2019 |
| Submission Date | May 8, 2019 |
| Published in Issue | Year 2019 Volume: 14 Issue: 1 |
