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Olufemi A Aluko and Muazu Ibrahim
''Does institutional quality explain the Lucas Paradox? Evidence from Africa''
( 2019, Vol. 39 No.3 )
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.
Keywords: Capital flows, Institutional quality, Lucas paradox, Africa
JEL: F2 - International Factor Movements and International Business: General
O5 - Economywide Country Studies: General
Manuscript Received : Apr 21 2019 Manuscript Accepted : Jul 07 2019

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