Policy Uncertainty , Irreversibility , and Cross-Border Flows of Capital BRANDON JULIO

  title={Policy Uncertainty , Irreversibility , and Cross-Border Flows of Capital BRANDON JULIO},
  author={Brandon Julio and Youngsuk Yook},
We examine the effects of government policy uncertainty on c ross-border capital flows. FDI flows from US companies to foreign affiliates drop si gnificantly during the period just before an election. The election effect for FDI i s larger than election cycles in domestic investment. The electoral patterns in FDI flows are more pronounced in countries with higher propensities for policy reversals and whe n election outcomes are more uncertain. Our identification strategy compares variation in… CONTINUE READING

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