Close elections kryptonite for foreign investors, Fed research finds
The timing of national elections has a negative impact on foreign direct investment (FDI) flows from US firms to their affiliates in 43 countries, according to a Federal Reserve research paper.
Examining the relationship between cross-border flows of capital and uncertainty over future government policy (using national elections as a proxy), Policy Uncertainty, Irreversibility, and Cross-Border Flows of Capital by Brandon Julio and Youngsuk Yook, finds that the average FDI rate drops by 12%
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