The Relationship between Monetary Policy and Foreign Direct Investment in Romania during 2003-2014

The present study tries to highlight the possible influence of the monetary policy decisions on ale flows of foreign direct investment in Romania through an econometric analysis. Advantages of FDI in the economy are many, namely financial stability, increasing productivity of physical capital and increasing employment of labor force but one can say that economic literature studied less the impact of monetary policy measures on FDI. The methodology used is based on a quantitative analysis and involves a database on: the flow of direct investment, money supply, exchange rate, monetary policy interest rate, inflation and GDP. The relationship between monetary policy instruments and FDI flows was measured and analyzed using a trigonometric equation for multifactor regression type. The estimated model was used to test the hypotheses about individual relationships of the independent variables and foreign direct investment in Romania. Calculations confirm that selected variables can be successfully used in the calibration of monetary policy decisions with the purpose to attract foreign investment in our country.