We explore the relation between international financial integration and the level of entrepreneurial activity in a country. Using a unique data set of approximately 24 million firms in nearly 100 countries in 1999 and 2004, we find suggestive evidence that international financial integration has...

This is a model of multinational firms, which introduces option value of foreign direct investment, into a framework of Dixit-Stiglitz type monopolistic competition. Starting from a pure trading equilibrium and solving for the optimal investment rule gives a scale-up factor which implies...

Using the international investment regime as its point of departure, the paper applies notions of bounded rationality to the study of economic diplomacy. Through a multi-method approach, it shows that developing countries often ignored the risks of bilateral investment treaties (BITs) until they...

This paper investigates the geography of multinational corporations’ investments in the EU regions. The ‘traditional’ sources of location advantages (i.e. agglomeration economies, market access and labour market conditions) are considered together with innovation and socio-institutional...

We use a panel of 20 OECD countries over a 30-year period to estimate the implications of international capital mobility for unemployment. We find that the increase in capital flows since the mid1980s has contributed to an amplification of the impulse response of unemployment to country-specific...

This paper brings together the literature on determination of home bias in equity holdings and the portfolio balance model of exchange rates to consider whether the dollar might be affected by a change in transactions costs that alters international portfolio allocations. Our empirical findings...

Labor market institutions, via their effect on the wage structure, affect the investment decisions of firms in labor markets with frictions. This observation helps explain rising wage inequality in the US, but a relatively stable wage structure in Europe in the 1980s. These different trends are...

This paper investigates the relationship between infation uncertainty and investment using a panel of loan-level data from small businesses. Micro-level data makes it possible to study phenomena that are obscured in country or industry aggregates. The data show that periods of increased...

Whether or not the marginal product of capital (MPK) differs across countries is a question that keeps coming up in discussions of comparative economic development and patterns of capital flows. We use easily accessible macroeconomic data to shed light on this issue, and find that MPKs are...

This paper shows that, with (partial) irreversibility, higher uncertainty reduces the impact effect of demand shocks on investment. Uncertainty increases real option values making firms more cautious when investing or disinvesting. This is confirmed both numerically for a model with a rich mix...