Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/86797 
Year of Publication: 
2009
Series/Report no.: 
Tinbergen Institute Discussion Paper No. 09-004/2
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
Abstract: 
We build a dynamic general equilibrium model with 2 countries, horizontal and vertical multinational activity and endogenous domestic and foreign investment. It is found that horizontal multinational activity always leads to a complementary relationship between domestic and foreign investment. Vertical multinational activity, in contrast, leads to either a substitutional or complementary relationship between domestic and foreign investment, depending on the firms' technologies. We test the theoretical implications with a panel of U.S. multinationals and find empirical support.
Subjects: 
Horizontal multinational firms
vertical multinational firms
domestic investments
neoclassical growth model
JEL: 
E22
F21
F23
Document Type: 
Working Paper

Files in This Item:
File
Size
406.2 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.