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Assessing the Effect of Quantitative Easing on Foreign Direct Investment in Brazil

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Listed:
  • Sahar Bahmani
  • Jeremy Toms

Abstract

Using econometric analysis, this paper examines the impact of quantitative easing undertaken by the Federal Reserve, on the level of foreign direct investment (FDI) in Brazil from the United States. This paper focuses on quantitative easing and U.S. investment abroad and its impact specifically on emerging economies, such as Brazil. This study finds that an increase in quantitative easing leads to an increase in capital flows from the U.S. into Brazil. It is found that Brazil's GDP, the U.S. monetary base, and the foreign exchange rate between the U.S. dollar and Brazilian real all have a strong impact on the level of foreign direct investment into Brazil. A substantial positive relationship between GDP and FDI is also established.

Suggested Citation

  • Sahar Bahmani & Jeremy Toms, 2015. "Assessing the Effect of Quantitative Easing on Foreign Direct Investment in Brazil," The American Economist, Sage Publications, vol. 60(2), pages 176-182, September.
    • Handle: RePEc:sae:amerec:v:60:y:2015:i:2:p:176-182
    DOI: 10.1177/056943451506000207
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    References listed on IDEAS

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    1. Pesaran, M. Hashem & Smith, Ron P., 2014. "Signs of impact effects in time series regression models," Economics Letters, Elsevier, vol. 122(2), pages 150-153.
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