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Author: Jiandong Ju
Publisher: INTERNATIONAL MONETARY FUND
ISBN: 9781451864380
Category : Capital movements
Languages : en
Pages : 39
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Book Description
International capital flows from rich to poor countries can be regarded as either too low (the Lucas paradox in a one-sector model) or too high (when compared with the logic of factor price equalization in a two-sector model). To resolve the paradoxes, we introduce a non-neoclassical model which features financial contracts and firm heterogeneity. In our model, free patterns of gross capital flow emerge as a function of the quality of the financial system and the level of protection for property rights(i.e., the risk of expropriation. A poor country with an inefficient financial system but a low expropriation risk may simultaneously experience an outflow of financial capital but an inflow of foreign direct investment (FDI), resulting in a small net flow.
Author: Jiandong Ju
Publisher: INTERNATIONAL MONETARY FUND
ISBN: 9781451864380
Category : Capital movements
Languages : en
Pages : 39
Get Book Here
Book Description
International capital flows from rich to poor countries can be regarded as either too low (the Lucas paradox in a one-sector model) or too high (when compared with the logic of factor price equalization in a two-sector model). To resolve the paradoxes, we introduce a non-neoclassical model which features financial contracts and firm heterogeneity. In our model, free patterns of gross capital flow emerge as a function of the quality of the financial system and the level of protection for property rights(i.e., the risk of expropriation. A poor country with an inefficient financial system but a low expropriation risk may simultaneously experience an outflow of financial capital but an inflow of foreign direct investment (FDI), resulting in a small net flow.
Author: Jiandong Ju
Publisher:
ISBN:
Category : Capital movements
Languages : en
Pages : 44
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Book Description
International capital flows from rich to poor countries can be regarded as either too low (the Lucas paradox in a one-sector model) or too high (when compared with the logic of factor price equalization in a two-sector model). To resolve the paradoxes, we introduce a non-neoclassical model which features financial contracts and firm heterogeneity. In our model, free patterns of gross capital flow emerge as a function of the quality of the financial system and the level of protection for property rights(i.e., the risk of expropriation. A poor country with an inefficient financial system but a low expropriation risk may simultaneously experience an outflow of financial capital but an inflow of foreign direct investment (FDI), resulting in a small net flow.
Author: Jiandong Ju
Publisher:
ISBN:
Category : Electronic books
Languages : en
Pages :
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Book Description
Author: Muhammad Akhtaruzzaman
Publisher: Springer
ISBN: 981139069X
Category : Business & Economics
Languages : en
Pages : 203
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Book Description
This book offers a comprehensive analysis of the debates on international capital flows, and presents a new evidence-based answer to the long-standing question of why capital doesn’t tend to flow from rich to poor countries as predicted by standard neoclassical theory – a puzzle known as the Lucas paradox. Further, the book reviews alternative approaches to conventional estimates of the marginal product of capital (MPK) and considers whether these estimates actually help us understand observed international capital flows. A rigorous quantitative approach is subsequently used to provide clear empirical evidence on the determinants of capital flows across borders. The findings of this empirical analysis suggest that generous economic policies on capital account convertibility are more influential than differences in institutional quality in terms of determining international capital flows. In closing, the relative importance of various types of political risk (e.g. expropriation and corruption) is examined. After determining that expropriation risk has one of the greatest effects on foreign direct investment (FDI), the book proposes an appealingly intuitive explanation for the lack of FDI flows to many capital-scarce developing countries.
Author: Mr.Thierry Tressel
Publisher: International Monetary Fund
ISBN: 145520935X
Category : Business & Economics
Languages : en
Pages : 46
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Book Description
Does capital flow from rich to poor countries? We revisit the Lucas paradox and explore the role of capital account restrictions in shaping capital flows at various stages of economic development. We find that, when accounting for the degree of capital account openness, the prediction of the neoclassical theory is confirmed: less developed countries tend to experience net capital inflows and more developed countries tend to experience net capital outflows, conditional of various countries’ characteristics. The findings are driven by foreign direct investment, portfolio equity investment, and to some extent by loans to the private sector.
Author: Bilal Keskinsoy
Publisher:
ISBN:
Category :
Languages : en
Pages : 25
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Book Description
This paper investigates international capital flows to developing countries for the period 1970-2006. The study focuses on the empirical puzzle that although one would expect international capital to flow to capital scarce countries where returns are higher, observation shows that capital flows to richer rather than to poorer countries (the Lucas paradox). To explore this, total capital is measured as the sum of foreign direct investment and portfolio equity flows. The paper addresses the argument, based on cross-section evidence (Alfaro et al., 2008, Rev. Econ. Stats), that including the quality of institutions accounts for the paradox (because richer countries have better institutions they attract more capital) and finds that this only holds if developed countries are included; within developing countries, institutions do not account for the paradox. Hence, for a consistent sample of 47 developing countries the positive wealth bias in international capital flows or the Lucas paradox is shown to be a persistent phenomenon in the long run.
Author: Dennis Reinhardt
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Author: Mika Nieminen
Publisher:
ISBN:
Category :
Languages : en
Pages : 30
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Book Description
According to standard economic theory, capital should flow from rich to poor countries. However, a reverse pattern has prevailed in the world economy. This is the so-called Lucas paradox. In addition, it has been shown that, counterintuitively, there is a negative correlation between capital inflow and productivity growth across developing countries. This is the so-called allocation puzzle. This review sheds light on the following questions: “What are the patterns of international capital flows in the world economy?”, “What are the most plausible explanations for these patterns?”, and “What are the possible implications of these developments for developing countries?” In addition, the current period is compared with the first era of financial globalization (1870-1914). The review finds that heterogeneity in financial development is central in explaining why capital tends to flow from poor to rich countries; that the net capital flow between poor and rich countries has been dominated by the reserve accumulation by central banks in emerging market and developing economies; and that capital controls have prevented private flows from offsetting the effect of reserve accumulation. These findings suggest that the Lucas paradox is not a paradox after all and that there is no allocation puzzle in private capital.
Author: Muhammad Akhtaruzzaman
Publisher:
ISBN:
Category :
Languages : en
Pages : 242
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Book Description
This thesis investigates the determinants of international capital flows and strives to present new evidence-based answers to the long-standing question of why capital tends not to flow from rich to poor countries as predicted by standard neoclassical theory - a puzzle known as the Lucas paradox. This thesis consists of four stand-alone empirical studies, each of which builds an inherently coherent story exploring a possible answer to the Lucas paradox motivated by the goal of empirically identifying the determinants of international capital flows.
Author: Masahiro Kawai
Publisher: Edward Elgar Publishing
ISBN: 184980687X
Category : Business & Economics
Languages : en
Pages : 465
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Book Description
Managing Capital Flows provides analyses that can help policymakers develop a framework for managing capital flows that is consistent with prudent macroeconomic and financial sector stability. While capital inflows can provide emerging market economies with invaluable benefits in pursuing economic development and growth, they can also pose serious policy challenges for macroeconomic management and financial sector supervision. The expert contributors cover a wide range of issues related to managing capital flows and analyze the experience of emerging Asian economies in dealing with surges in capital inflows. They also discuss possible policy measures to manage capital flows while remaining consistent with the goals of macroeconomic and financial sector stability. Building on this analysis, the book presents options for workable national policies and regional policy cooperation, particularly in exchange rate management. Containing chapters that bring in international experiences relevant to Asia and other emerging market economies, this insightful book will appeal to policymakers in governments and financial institutions, as well as public and private finance experts. It will also be of great interest to advanced students and academic researchers in finance.
