Entry by Foreign Firms in the United States Under Exchange Rate Uncertainty

This paper tests the effects that real exchange-rate fluctuations had on foreign direct investment into the United States during the 1980s. Using a sample of foreign investments in sixty-one four-digit SIC U.S. wholesale industries, this paper finds exchange-rate volatility to be negatively correlated with the number of foreign investments that occur in these industries. This negative effect is most pronounced for industries where sunk...