This paper, based on Camarero et al. (2023), analyzes the long-run determinants of US outward FDI (OFDI) stock, focusing mainly on the Euro Area (EA) for the period 1985-2019. We consider a sample of 54 developed and emerging host countries representing over 70% of the total US OFDI stock. We implement a Dynamic Common Correlated Effects Pooled Mean Group (DCCEPMG) estimator for this aim. Our econometric approach is especially suited for analyzing integrated economic areas as it allows us to deal with cross-section dependence (CSD), non-stationarity, structural breaks, and slope homogeneity usually present in large panel data. Our main results suggest that horizontal (HFDI) and vertical (VFDI) strategies coexist for all country groups. However, as we move towards more homogeneous groups, the results show the greater importance of VFDI. Additionally, we find that some variables have a common long-run effect on US OFDI, especially for smaller and more homogeneous groups.
|Author:||Mariam; Sergi; Cecilio, Camarero; Moliner; Tamarit|
|No. of pages:||5|