Why does not capital frlow from rich to poor countries? An Empirical investigation

Laura Alfaro and Sebnem Kalemli-Ozcan

No 416, Econometric Society 2004 North American Summer Meetings from Econometric Society

Abstract: We examine the role of different explanations for the lack of flows of capital from rich to poor countries---the Lucas paradox---in an empirical framework. Broadly speaking, the theoretical explanations for this paradox include differences in fundamentals affecting the production structure versus international capital market imperfections. Our cross-country regressions show that, for the period 1971$-$1998, institutional quality is the most important causal variable explaining the Lucas paradox. Human capital and asymmetric information play a role as determinants of capital inflows but these variables cannot fully account for the paradox

Keywords: capital flows; Lucas paradox; fundamentals; market imperfections (search for similar items in EconPapers)
JEL-codes: F21 F41 O21 (search for similar items in EconPapers)
Date: 2004-08-11
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.uh.edu/skalemli/lucas39.pdf main text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.uh.edu/skalemli/lucas39.pdf [302 Object Moved]--> https://uh.edu/skalemli/lucas39.pdf)

Related works:
Working Paper: Why Doesn't Capital Flow from Rich to Poor Countries? An Empirical Investigation (2005)
Working Paper: Why doesn't capital flow from rich to poor countries? An empirical investigation (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecm:nasm04:416

Access Statistics for this paper

More papers in Econometric Society 2004 North American Summer Meetings from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Christopher F. Baum ().