A Solution to Two Paradoxes of International Capital Flows - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook A Solution to Two Paradoxes of International Capital Flows write by Jiandong Ju. This book was released on 2006. A Solution to Two Paradoxes of International Capital Flows available in PDF, EPUB and Kindle. 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.
A Solution to Two Paradoxes of International Capital Flow
A Solution to Two Paradoxes of International Capital Flow - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook A Solution to Two Paradoxes of International Capital Flow write by Jiandong Ju. This book was released on 2006-07-01. A Solution to Two Paradoxes of International Capital Flow available in PDF, EPUB and Kindle. 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.
IMF Working Papers
IMF Working Papers - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook IMF Working Papers write by Jiandong Ju. This book was released on 2006. IMF Working Papers available in PDF, EPUB and Kindle.
International Capital Flows and the Lucas Paradox
International Capital Flows and the Lucas Paradox - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook International Capital Flows and the Lucas Paradox write by Muhammad Akhtaruzzaman. This book was released on 2019-06-21. International Capital Flows and the Lucas Paradox available in PDF, EPUB and Kindle. 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.
Lucas Paradox in the Long-Run
Lucas Paradox in the Long-Run - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Lucas Paradox in the Long-Run write by Bilal Keskinsoy. This book was released on 2017. Lucas Paradox in the Long-Run available in PDF, EPUB and Kindle. 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.
