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Does institutional quality explain the Lucas Paradox? Evidence from Africa

Author

Listed:
  • Olufemi A Aluko

    (Department of Finance, University of Ilorin, Kwara State, Nigeria.)

  • Muazu Ibrahim

    (Department of Banking and Finance, University for Development Studies, Ghana)

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.

Suggested Citation

  • Olufemi A Aluko & Muazu Ibrahim, 2019. "Does institutional quality explain the Lucas Paradox? Evidence from Africa," Economics Bulletin, AccessEcon, vol. 39(3), pages 1687-1693.
    • Handle: RePEc:ebl:ecbull:eb-19-00378
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    References listed on IDEAS

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    Cited by:

    1. MULOWAYI, Francis K. & PINSHI, Christian P., 2023. "Lucas Paradox, Institutional Quality and Corruption: Evidence from D.R. Congo," MPRA Paper 117370, University Library of Munich, Germany.

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    More about this item

    Keywords

    Capital flows; Institutional quality; Lucas paradox; Africa;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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