Warsaw Economic Seminars - “Foreign Direct Investment over the International Business Cycle” [09.03.2023]
We kindly invite you to take part in the next meeting within the Warsaw Economic Seminars series, organised jointly by the Faculty of Economic Sciences, University of Warsaw and the Warsaw School of Economics.
During the meeting Jacek Rothert, Ph.D. (U.S. Naval Academy) will present the study “Foreign Direct Investment over the International Business Cycle”.
The seminar will take place on March 9th 2023 at 5 p.m. in hybrid mode: in room B202 at the Faculty of Economic Sciences, University of Warsaw (Długa 44/50) and via Zoom platform.
Link to the meeting:
https://uw-edu-pl.zoom.us/j/94952861067?pwd=eWFxK0N3SWJJdUNtZUQ4RDYxQ1loZz09
Meeting ID: 949 5286 1067
Passcode: 149259
Abstract:
Among the G7 economies, gross foreign direct investment (FDI) positions are very large, averaging 100% of GDP and dwarfing the absolute values of net FDI positions in most countries. Additionally, inward and outward FDI flows exhibit robust, positive correlation over the business cycle. To understand these stylized facts on gross FDI flows, we extend the standard international business cycle (IBC) model to allow domestic and foreign ownership of physical capital to be imperfect substitutes. We estimate the elasticity of substitution using the co-movement of gross FDI flows, and find it to be less than 2.5 - a value much smaller than the implicitly assumed infinite elasticity in the IBC literature. Our results uncover a new source of welfare gains from openness to FDI among otherwise identical, developed economies - a capital diversity channel, akin to product variety in trade models. The channel is quantitatively important - openness to FDI yields steady-state welfare gains equivalent to at least a 4-5% increase in life-time consumption.
The calendar of all seminars within the Warsaw Economic Seminars series is available on the website: https://sites.google.com/site/warsaweconseminars/calendar
The aim of the Warsaw Economic Seminars series is to create a platform for researchers and specialists from all over the world to present their research and share knowledge on economics and economic policy.
The participants can both listen to presentations and take part in discussions and present their own research to get feedback from other researchers and students.
