01772cas a2200241 a 4500 AALejournalIMF001618 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451843798 1018-5941 BD-DhAAL BD-DhAAL Aizenman, Joshua. Exchange Rate Flexibility, Volatility and the Patterns of Domestic and Foreign Direct Investment / Joshua Aizenman. Washington, D.C. : International Monetary Fund, 1992. 1 online resource (32 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper investigates the factors determining the impact of exchange rate regimes on the behavior of domestic investment and foreign direct investment (FDI). Producers may diversify internationally in order to increase the flexibility of production. We characterize the possible equilibria in a macro model that allows for the presence of a short-run Phillips curve. It is shown that a fixed exchange rate regime is more conducive to FDI relative to a flexible exchange rate, and this conclusion applies for both real and nominal shocks. If the dominant shocks are nominal (real) we will observe a negative (a positive) correlation between exchange rate volatility and the level of investment. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1992/020 Full text available on IMF http://elibrary.imf.org/view/journals/001/1992/020/001.1992.issue-020-en.xml IMF e-Library