Does institutional quality explain the Lucas Paradox? Evidence from Africa

Olufemi Aluko () and Muazu Ibrahim ()
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Olufemi Aluko: Department of Finance, University of Ilorin, Kwara State, Nigeria.
Muazu Ibrahim: Department of Banking and Finance, University for Development Studies, Ghana

Economics Bulletin, 2019, vol. 39, issue 3, 1687-1693

Abstract: The Lucas Paradox occurs when capital does not flow from the rich to poor countries contrary to the prediction of the neoclassical model. We examine whether institutional quality explains the Lucas paradox in Africa. Our evidence suggests that, the paradox by far is unexplained by institutional quality. This evidence is robust to the presence of outliers and endogeneity.

Keywords: Capital flows; Institutional quality; Lucas paradox; Africa (search for similar items in EconPapers)
JEL-codes: F2 O5 (search for similar items in EconPapers)
Date: 2019-07-07
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Citations: View citations in EconPapers (1)

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