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Private Capital Flows to Low Income Countries: Country-Specific Effects and the Lucas Paradox

Author

Listed:
  • Corine Franken

    (University of Amsterdam)

  • Sweder van Wijnbergen

    (University of Amsterdam, the Netherlands)

Abstract

This paper analyses Net Private Capital Flows to LICs incorporating the recent surge in FDI between 2000 and 2006. We show that including country-specific effects in a paneldata setup resolves the Lucas Paradox, at least for LICs. Our results suggest that openness is among the most important factors explaining country-specific performance in attracting Net Private Capital Flows.

Suggested Citation

  • Corine Franken & Sweder van Wijnbergen, 2010. "Private Capital Flows to Low Income Countries: Country-Specific Effects and the Lucas Paradox," Tinbergen Institute Discussion Papers 10-003/2, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20100003
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    File URL: https://papers.tinbergen.nl/10003.pdf
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    Citations

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    Cited by:

    1. Calderón, César & Kubota, Megumi, 2019. "Ride the Wild Surf: An investigation of the drivers of surges in capital inflows," Journal of International Money and Finance, Elsevier, vol. 92(C), pages 112-136.
    2. Herrmann, Sabine & Kleinert, Jörn, 2014. "Lucas paradox and allocation puzzle: Is the euro area different?," Discussion Papers 06/2014, Deutsche Bundesbank.
    3. Araujo, Juliana D. & David, Antonio C. & van Hombeeck, Carlos & Papageorgiou, Chris, 2017. "Joining the club? Procyclicality of private capital inflows in lower income developing economies," Journal of International Money and Finance, Elsevier, vol. 70(C), pages 157-182.
    4. Ms. Juliana Dutra Araujo & Mr. Antonio David & Carlos van Hombeeck & Mr. Chris Papageorgiou, 2015. "Joining the Club? Procyclicality of Private Capital Inflows in Low Income Developing Countries," IMF Working Papers 2015/163, International Monetary Fund.
    5. Philip R. Lane, 2015. "International Financial Flows in Low-Income Countries," Pacific Economic Review, Wiley Blackwell, vol. 20(1), pages 49-72, February.
    6. repec:grz:wpaper:2014-01 is not listed on IDEAS

    More about this item

    Keywords

    Private capital inflows; Low Income Countries; Lucas Paradox;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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