Endogenous Flows of Foreign Direct Investment and International Real Business Cycles

摘要: This paper models flows of foreign direct investment (FDI) in a two country, sector DSGE framework. The allocation capital to production capacity abroad is subject search-and-matching friction with endogenous reallocation. model calibrated on observed inflows and outflows FDI leads dynamics consistent the empirical evidence documented this paper: relative domestic investment, more volatile, inward outward are positively correlated. contrasts standard International Real Business Cycle which predicts negative correlation low volatility. Moreover, generates cross-country aggregate correlations data. JEL classification: F41 E32 E22