Abstract
The investment development path (IDP) approach claims that
countries go through five stages with respect to their net outward
investment positions as they develop. Attempts to test its validity
using time-series or cross-section estimation techniques were
moderately successful and the functional specifications used did not reflect IDP structure well. In this study, we introduce a fluctuation function, which is obtained from the general solution of an exponential function reflecting a continuous compounding process. It has extra properties that help capture the idiosyncratic shape of IDP and gives parameter estimates that facilitate interpretation of the stage a country is at.
countries go through five stages with respect to their net outward
investment positions as they develop. Attempts to test its validity
using time-series or cross-section estimation techniques were
moderately successful and the functional specifications used did not reflect IDP structure well. In this study, we introduce a fluctuation function, which is obtained from the general solution of an exponential function reflecting a continuous compounding process. It has extra properties that help capture the idiosyncratic shape of IDP and gives parameter estimates that facilitate interpretation of the stage a country is at.
| Original language | English |
|---|---|
| Number of pages | 20 |
| Journal | International Journal of Applied Econometrics and Quantitative Studies |
| Volume | 6 |
| Issue number | 2 |
| Publication status | Published - 2009 |
| Externally published | Yes |
Keywords
- investment development path
- trigonometric function
- nonlinear estimation